January 29, 1996 - Introduced by Representatives Kaufert, Meyer, Hanson,
Huebsch, Brancel, Freese, Johnsrud, Murat, Olsen, Travis, Green, Jensen,
Hoven, Ziegelbauer, Baldus
and Albers, cosponsored by Senators Schultz,
Andrea, Burke, Petak, Drzewiecki, Shibilski, Welch, Grobschmidt, Darling

and Jauch. Referred to Committee on Financial Institutions.
AB830,1,6 1An Act to repeal 422.201 (2) (c), 422.201 (10), 422.201 (10m) and 422.421 (6) (b);
2to renumber 422.421 (6) (a) 1.; to renumber and amend 422.421 (6) (a) 2.;
3to amend 138.05 (6), 403.806, 422.415 (1), 422.415 (2) (intro.), 422.421 (1) (c)
4and 426.201 (5); to repeal and recreate 422.202 (2m); and to create 422.201
5(10s) of the statutes; relating to: permissible finance charges and other
6charges for open-end credit plans under the Wisconsin consumer act.
Analysis by the Legislative Reference Bureau
Current law places certain limitations on the maximum interest that can be
charged in consumer credit transactions entered into under an open-end credit plan,
such as credit card accounts. These limitations depend upon when the open-end
credit plan was entered into. For example, with respect to transactions under an
open-end credit plan that is entered into on or after November 1, 1981, the parties
generally may not agree to the payment by the customer of a finance charge in excess
of 18% per year calculated according to the actuarial method. This bill repeals these
limitations and provides that, regardless of the date on which an open-end credit
plan is entered into, the parties may agree to the payment by the customer of a
finance charge at any periodic rate.
Current law also limits the charges and fees, other than finance charges, that
may be imposed on consumer credit transactions under an open-end credit plan.
Under current law, the parties may generally agree only to the following types of
charges, other than finance charges: 1) a charge not to exceed $10 in any billing cycle
in which the creditor does not receive at least the minimum payment due; 2) a charge
not to exceed 50 cents in any billing cycle in which the balance is less than $33.34;
3) a charge for certain cash advances not to exceed the greater of $2 or 2% of the
amount of the cash advance, up to a maximum of $5 per cash advance; 4) a charge

not to exceed $10 in any billing cycle in which the unpaid balance exceeds the credit
limit under the plan; and 5) a charge not to exceed $15 for certain dishonored checks
presented for payment to a creditor. This bill repeals these limitations and instead
provides that a creditor may charge, collect and receive other fees and charges, in
addition to the finance charge authorized under current law, that are agreed upon
by the creditor and the customer. These other fees and charges may include periodic
membership fees, cash advance fees, charges for exceeding a designated credit limit,
charges for late payments, charges for providing copies of documents and charges for
the return of a dishonored check or other payment instrument.
Under current federal law, national banks, state-chartered federally insured
depository institutions, insured branches of foreign banks, credit unions and savings
and loan associations are generally permitted to charge "interest at the rate allowed
by the laws of the state" in which the bank, institution or branch is located. This bill
provides that, for purposes of this federal law, the charges and fees discussed in the
previous paragraph may be charged, collected and received by the creditor "as
interest". The bill also provides that, for purposes of these federal laws, the terms
and conditions of an open-end credit plan, including the following provisions, are
material to the determination of the interest rate: 1) provisions relating to the
method of determining the balance upon which the interest or finance charge is
applied; 2) provisions regarding the time periods within which fees and charges are
applied or within which they may be avoided; 3) default provisions; 4) cancellation
provisions; 5) choice of law provisions; and 6) provisions regarding changes in the
terms and conditions of the open-end credit plan.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB830, s. 1 1Section 1. 138.05 (6) of the statutes is amended to read:
AB830,2,32 138.05 (6) This section does not apply to transactions governed by chs. 421 to
3427 or to discounts described in s. 422.201 (8) or (10) (e).
AB830, s. 2 4Section 2. 403.806 of the statutes is amended to read:
AB830,3,2 5403.806 Liability for worthless check or draft. Any person who issues a
6check or other draft which is not honored upon presentment, because the drawer does
7not have an account with the drawee or because the drawer does not have sufficient
8funds in his or her account or sufficient credit with the drawee, is liable for all
9reasonable costs and expenses in connection with the collection of the amount for
10which such check or draft was written, except recovery is not permitted under this

1section if a person licensed under s. 138.09 or any other person collected or could have
2collected a charge for that check or other draft under s. 422.202 (1) (d) or (2m) (cm).
AB830, s. 3 3Section 3. 422.201 (2) (c) of the statutes is repealed.
AB830, s. 4 4Section 4. 422.201 (10) of the statutes is repealed.
AB830, s. 5 5Section 5. 422.201 (10m) of the statutes is repealed.
AB830, s. 6 6Section 6. 422.201 (10s) of the statutes is created to read:
AB830,3,97 422.201 (10s) Regardless of the date that an open-end credit plan is entered
8into, the parties may agree to the payment by the customer of a finance charge at any
9periodic rate.
AB830, s. 7 10Section 7. 422.202 (2m) of the statutes is repealed and recreated to read:
AB830,3,1211 422.202 (2m) With respect to an open-end credit plan, regardless of when the
12plan was entered into:
AB830,3,1813 (a) A creditor may charge, collect and receive other fees and charges, in addition
14to the finance charge authorized under s. 422.201, that are agreed upon by the
15creditor and the customer. These other fees and charges may include periodic
16membership fees, cash advance fees, charges for exceeding a designated credit limit,
17charges for late payments, charges for providing copies of documents and charges for
18the return of a dishonored check or other payment instrument.
AB830,3,2119(b) For purposes of 12 USC 85, 1463 (g), 1785 and 1831d, both the finance
20charge under s. 422.201 and charges permitted under par. (a) are interest and may
21be charged, collected and received as interest by a creditor.
AB830,3,2422(c) For purposes of 12 USC 85, 1463 (g), 1785 and 1831d, the terms and
23conditions of an open-end credit plan, including the following provisions, are
24material to the determination of the interest rate:
AB830,4,2
11. Provisions relating to the method of determining the balance upon which the
2interest or finance charge is applied.
AB830,4,43 2. Provisions regarding the time periods within which fees and charges are
4applied or within which they may be avoided.
AB830,4,55 3. Default provisions.
AB830,4,66 4. Cancellation provisions.
AB830,4,77 5. Choice of law provisions.
AB830,4,98 6. Provisions regarding changes in the terms and conditions of the open-end
9credit plan.
AB830, s. 8 10Section 8. 422.415 (1) of the statutes is amended to read:
AB830,4,1911 422.415 (1) Except as provided in sub. (2), no creditor shall make any change
12in the terms of open-end credit plans that is adverse to the interests of the customer
13with respect to any outstanding balances or that imposes or alters a charge permitted
14under s. 422.202 (2m) (a) to (cm) or (e). For the purposes of this section, a change shall
15be presumed to be adverse if the result thereof is to increase the rate of the finance
16charge or the amount of the periodic payment due. Outstanding balances shall be
17determined on the assumption that all payments shall be credited first to any finance
18charges that may be due and then to the payment of debts in the order in which the
19entries to the account showing the debts were made.
AB830, s. 9 20Section 9. 422.415 (2) (intro.) of the statutes is amended to read:
AB830,4,2421 422.415 (2) (intro.) A change that is adverse to the interests of the customer
22with respect to outstanding balances or that imposes or alters a charge permitted
23under s. 422.202 (2m) (a) to (cm) or (e) may be made if any of the following conditions
24is met:
AB830, s. 10 25Section 10. 422.421 (1) (c) of the statutes is amended to read:
AB830,5,7
1422.421 (1) (c) "Variable rate transaction" means any open-end credit plan and
2any consumer credit transaction other than one pursuant to an open-end credit plan,
3the terms of which permit the rate of finance charge to be adjusted from time to time
4during the term of the plan or transaction other than by an adjustment under s.
5422.201 (10m) or 422.415, but does not include any consumer credit transaction the
6terms of which permit only the rates of finance charge that are initially numerically
7specified in any document evidencing the plan or transaction.
AB830, s. 11 8Section 11. 422.421 (6) (a) 1. of the statutes is renumbered 422.421 (6) (a).
AB830, s. 12 9Section 12. 422.421 (6) (a) 2. of the statutes is renumbered 422.421 (6) (c) and
10amended to read:
AB830,5,1311 422.421 (6) (c) The maximum rate of finance charge established under subd.
121.
par. (a) shall continue in effect for the entire term of the payment period regardless
13of any changes in the limit set forth in s. 422.201 (2) (bm) during the payment period.
AB830, s. 13 14Section 13. 422.421 (6) (b) of the statutes is repealed.
AB830, s. 14 15Section 14. 426.201 (5) of the statutes is amended to read:
AB830,5,1716 426.201 (5) No person is subject to this section solely by reason of offering the
17discount described in s. 422.201 (8) or (10) (e).
AB830,5,1818 (End)
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