Section 114B Finance charges on open end credit accounts; maximum rates; computation
Section 114B. Notwithstanding the provisions of sections ninety A, one hundred, and one hundred and fourteen A, a creditor may charge a daily, monthly or other periodic rate of finance charge on loans made pursuant to any open-end credit plan as defined by section one of chapter one hundred and forty D, equivalent to but not in excess of eighteen percent determined in accordance with paragraph (2) of subsection (a) of section five of said chapter one hundred and forty D; provided, however, that no finance or other charge shall begin to accrue until the date upon which payment has been made by the creditor on any transaction under any such open-end credit plan; and, provided further, that if the index rate for any calendar quarter, as hereinafter determined, exceeds eighteen percent, the creditor may, during such calendar quarter, charge such daily, monthly or other periodic rate or rates as may be established by such creditor. The commissioner of banks shall determine as of the computation dates of December first, March first, June first and September first of each year, and not later than one business day after each such computation date, the index rate for the succeeding calendar quarter beginning January first, April first, July first and October first, respectively. The index rate determined on each computation date for the following calendar quarter shall be the number determined by doubling the average of the rates established and announced, as the auction average on a discount basis, for United States Treasury bills with maturities of ninety-one days at the auctions held during the three calendar months preceding the computation date. At the option of the creditor, the periodic rate that a creditor charges on an account may be adjusted to reflect a change in the index rate either on the first day of the respective calendar quarter or on the first day of the first billing cycle of the account immediately following such date; provided, however, that any limitation on finance charges imposed under this section shall remain in effect for three months from the date so chosen. A finance charge not in excess of fifty cents for a monthly or longer billing cycle or the pro rata part of fifty cents for a billing cycle shorter than monthly may be assessed if the finance charge otherwise assessable is less than fifty cents. For the purpose of this section, a billing cycle shall be considered to be monthly if the billing dates are on the same day of each month or do not vary by more than four days therefrom. A creditor may, pursuant to an open-end credit plan, charge, receive and collect a delinquency charge on any payment not paid in full within fifteen days of its due date in an amount equal to ten percent of the outstanding balance or ten dollars, whichever is less; provided, however, that no such delinquency charges shall be charged, received or collected unless the creditor, at least thirty days prior thereto, shall have mailed a notice informing its borrowers of the change in terms of such plan providing for the charging, receiving and collecting of a delinquency charge and disclosing the amount of such delinquency charge that may be imposed as part of said open-end credit plan.
In addition to disclosures of such rate required by chapter one hundred and forty D, the commissioner of banks shall have the authority to promulgate regulations requiring additional disclosures by creditors concerning periodic rate, other costs of credit, and any other additional features of the agreement.
A finance charge imposed on a transaction subject to this section but not subject to the provisions of the first paragraph of section twenty of chapter one hundred and forty D shall be computed on (i) the previous balance after deducting all payments on account received by the creditor during the cycle and all credits to the account during the cycle applicable to any transaction reflected in the previous balance; or (ii) the average daily balance determined by adding the daily balances on the account for each day in the billing cycle and dividing the total by the number of days in the billing cycle; or (iii) daily balances. Any such delinquency charge shall not be included in the computation of said finance charge.