Texas

301.002. DEFINITIONS. (a) In this subtitle:
(1) "Contract interest" means interest that an obligor
has paid or agreed to pay to a creditor under a written contract of
the parties. The term does not include judgment interest.
(2) "Credit card transaction" means a transaction for
personal, family, or household use in which a credit card, plate,
coupon book, or credit card cash[0] advance check[0] may be used or is
used to debit an open-end account in connection with:
(A) a purchase or lease of goods or services; or
(B) a loan of money.
(3) "Creditor" means a person who loans money or
otherwise extends credit. The term does not include a judgment
creditor.
(4) "Interest" means compensation for the use,
forbearance, or detention of money. The term does not include time
price differential, regardless of how it is denominated.
(5) "Judgment creditor" means a person to whom a money
judgment is payable.
(6) "Judgment debtor" means a person obligated to pay
a money judgment.
(7) "Judgment interest" means interest on a money
judgment, whether the interest accrues before, on, or after the
date the judgment is rendered.
(8) "Legal interest" means interest charged or
received in the absence of any agreement by an obligor to pay
contract interest. The term does not include judgment interest.
(9) "Lender credit card agreement":
(A) means an agreement between a creditor and an
obligor that provides that:
(i) the obligor, by means of a credit card
transaction for personal, family, or household use, may:
(a) obtain loans from the creditor
directly or through other participating persons; and
(b) lease or purchase goods or
services from more than one participating lessor or seller who
honors the creditor's credit card;
(ii) the creditor or another person acting
in cooperation with the creditor is to reimburse the participating
persons, lessors, or sellers for the loans or the goods or services
purchased or leased;
(iii) the obligor is to pay the creditor the
amount of the loan or cost of the lease or purchase;
(iv) the unpaid balance of the loan, lease,
or purchase and interest on that unpaid balance are debited to the
obligor's account under the agreement;
(v) interest may be computed on the
balances of the obligor's account but is not precomputed; and
(vi) the obligor and the creditor may agree
that payment of part of the balance may be deferred[0];
(B) includes an agreement under Section 342.455
or Section 346.003(b) or (c) for an open-end account under which
credit card transactions may be made or a merchant discount may be
taken; and
(C) does not include:
(i) an agreement, including an open-end
account credit agreement, between a seller and a buyer or between a
lessor and a lessee; or
(ii) an agreement under which:
(a) the entire balance is due in full
each month; and
(b) no interest is charged if the
obligor pays the entire balance each month.
(10) "Loan" means an advance of money that is made to
or on behalf of an obligor, the principal amount of which the
obligor has an obligation to pay the creditor. The term does not
include a judgment.
(11) "Merchant discount" means the consideration,
including a fee, charge, discount, or compensating balance, that a
creditor requires, or that a creditor, subsidiary, or parent
company of the creditor, or subsidiary of the creditor's parent
company, receives directly or indirectly from a person other than
the obligor in connection with a credit card transaction under a
lender credit card agreement between the obligor and the creditor.
The term does not include consideration received by a creditor from
the obligor in connection with the credit card transaction.
(12) "Money judgment" means a judgment for money. For
purposes of this subtitle, the term includes legal interest or
contract interest, if any, that is payable to a judgment creditor
under a judgment.
(13) "Obligor" means a person to whom money is loaned
or credit is otherwise extended. The term does not include:
(A) a judgment debtor; or
(B) a surety, guarantor, or similar person.
(14) "Open-end account":
(A) means an account under a written contract
between a creditor and an obligor in connection with which:
(i) the creditor reasonably contemplates
repeated transactions and the obligor is authorized to make
purchases or borrow money;
(ii) interest or time price differential
may be charged from time to time on an outstanding unpaid balance;
and
(iii) the amount of credit that may be
extended during the term of the account is generally made available
to the extent that any outstanding balance is repaid; and
(B) includes an account under an agreement
described by Section 342.455 or Chapter 345 or 346.
(15) "Prepayment penalty" means consideration agreed
on and contracted for a discharge of a loan, other than a loan
governed by Chapter 306, before its maturity or a regularly
scheduled date of payment, as a result of an obligor's election to
pay all of the principal amount before its stated maturity or a
regularly scheduled date of payment.
(16) "Time price differential" means an amount,
however denominated or expressed, that is:
(A) added to the price at which a seller offers to
sell services or property to a purchaser for cash[0] payable at the
time of sale; and
(B) paid or payable to the seller by the
purchaser for the privilege of paying the offered sales price after
the time of sale.
(17) "Usurious interest" means interest that exceeds
the applicable maximum amount allowed by law.
(b) The Finance Commission of Texas by rule may adopt other
definitions to accomplish the purposes of this title.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999; Acts 1999, 76th Leg., ch. 909, § 2.01, eff. Sept. 1, 1999.
FINANCE CODE

SUBTITLE B. LOANS AND FINANCED TRANSACTIONS

CHAPTER 341. GENERAL PROVISIONS

SUBCHAPTER A. DEFINITIONS AND TIME COMPUTATION

§ 341.001. DEFINITIONS. In this subtitle:
(1) "Authorized lender" means a person who holds a
license issued under Chapter 342, a bank, or a savings association.
(2) "Bank" means a person:
(A) organized as a state bank under Subtitle A,
Title 3, or under similar laws of another state if the deposits of a
bank from another state are insured by the Federal Deposit
Insurance Corporation; or
(B) organized as a national bank under 12 U.S.C.
Section 21 et seq., as subsequently amended.
(3) "Cash[0] advance" means the total of the amount of
cash[0] or its equivalent that the borrower receives and the amount
that is paid at the borrower's direction or request, on the
borrower's behalf, or for the borrower's benefit.
(4) "Commissioner" means the consumer credit
commissioner.
(5) "Credit union" means a person:
(A) doing business under Subtitle D, Title 3; or
(B) organized under the Federal Credit Union Act
(12 U.S.C. Section 1751 et seq.), as subsequently amended.
(6) "Deferred[0] presentment transaction" means a
transaction in which:
(A) a cash[0] advance in whole or part is made in
exchange for a personal check[0] or authorization to debit a deposit
account;
(B) the amount of the check[0] or authorized debit
equals the amount of the advance plus a fee; and
(C) the person making the advance agrees that the
check[0] will not be cashed or deposited or the authorized debit will
not be made until a designated future date.
(7) "Finance commission" means the Finance Commission
of Texas or a subcommittee created by rule of the Finance Commission
of Texas.
(8) "Interest" has the meaning assigned by Section
301.002.
(9) "Loan" has the meaning assigned by Section 301.002
and includes a sale-leaseback transaction and a deferred[0]
presentment transaction.
(10) "Sale-leaseback transaction" means a transaction
in which a person sells personal property used primarily for
personal, family, or household use and the buyer of the property
agrees to lease the property back to the seller. In a
sale-leaseback transaction:
(A) the buyer is a creditor and the seller is an
obligor;
(B) an agreement to defer payment of a debt and an
obligation to pay the debt are established; and
(C) any amount received by the buyer in excess of
the price paid for the property by the buyer is interest subject to
this subtitle.
(11) "Savings association" means a person:
(A) organized as a state savings and loan
association or savings bank under Subtitle B or C, Title 3, or under
similar laws of another state if the deposits of the savings
association from another state are insured by the Federal Deposit
Insurance Corporation; or
(B) organized as a federal savings and loan
association or savings bank under the Home Owners' Loan Act (12
U.S.C. Section 1461 et seq.), as subsequently amended.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.033, eff. Sept. 1, 1999;
Acts 2001, 77th Leg., ch. 1235, § 9, eff. Sept. 1, 2001.

§ 341.002. COMPUTATION OF MONTH. (a) For the
computation of time in this subtitle, a month is the period from a
date in a month to the corresponding date in the succeeding month.
If the succeeding month does not have a corresponding date, the
period ends on the last day of the succeeding month.
(b) For the computation of a fraction of a month, a day is
equal to one-thirtieth of a month.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

SUBCHAPTER B. REGULATING OFFICIAL

§ 341.101. CONSUMER CREDIT COMMISSIONER. The consumer
credit commissioner has the powers and shall perform all duties
relating to the issuance of a license under this subtitle and is
responsible for the other administration of this subtitle except as
provided by this subchapter.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

§ 341.102. REGULATION OF BANKS. (a) The banking
commissioner shall enforce this subtitle relating to the regulation
of a state bank operating under this subtitle.
(b) The official exercising authority over the operations
of national banks equivalent to the authority exercised by the
banking commissioner over state banks may enforce this subtitle
relating to the regulation of a national bank operating under this
subtitle.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

§ 341.103. REGULATION OF SAVINGS
ASSOCIATIONS. (a) The savings and loan commissioner shall
enforce this subtitle relating to the regulation of state savings
associations operating under this subtitle.
(b) The official exercising authority over the operation of
federal savings associations equivalent to the authority exercised
by the savings and loan commissioner over state savings
associations may enforce this subtitle relating to the regulation
of a federal savings association operating under this subtitle.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.034, eff. Sept. 1, 1999.

§ 341.104. REGULATION OF CREDIT UNIONS. (a) The
credit union commissioner shall enforce this subtitle relating to
the regulation of state credit unions operating under this
subtitle.
(b) The official exercising authority over federal credit
unions equivalent to the authority exercised by the credit union
commissioner may enforce this subtitle relating to the regulation
of a federal credit union operating under this subtitle.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

SUBCHAPTER C. REVISED CEILINGS AND BRACKETS

§ 341.201. DEFINITIONS OF INDEXES. In this subchapter:
(1) "Consumer price index" means the Consumer Price
Index for Urban Wage Earners and Clerical Workers: U.S. City
Average, All Items, 1967=100, compiled by the Bureau of Labor
Statistics, United States Department of Labor, or, if that index is
canceled or superseded, the index chosen by the Bureau of Labor
Statistics as most accurately reflecting the changes in the
purchasing power of the dollar for consumers.
(2) "Reference base index" means the consumer price
index for December 1967.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

§ 341.202. REVISION OF CEILING OR BRACKET.

See, also, italicized material following text of this section

(a) Each year the commissioner shall compute, in accordance
with Section 341.203, the amount of each:
(1) ceiling on a cash[0] advance regulated under this
subtitle that is required to be revised; and
(2) bracket that establishes a range of cash[0] advances
or balances to which a maximum charge provided by this subtitle
applies and that is required to be revised.
(b) The revised ceiling or bracket amount takes effect on
July 1 of the year of its computation.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

Amendment by Acts 1997, 75th Leg., ch. 1396, § 7

V.T.C.A., Government Code § 311.031(c) provides, in part, that
the repeal of a statute by a code does not affect an amendment of the
statute by the same legislature which enacted the code and that the
amendment is preserved and given effect as part of the code
provision.

Section 7 of Acts 1997, 75th Leg., ch. 1396, eff. Sept. 1, 1997,
amends § (1) of Vernon's Ann.Civ.St. art. 5069-2.08 [now this
section] without reference to the repeal of said article by Acts
1997, 75th Leg., ch. 1008, § 6. As so amended, § (1) reads:

"The dollar amount of the ceilings on the cash[0] advance, and the
brackets establishing ranges of cash[0] advances or balances to which
certain rates of charges apply in this Title, except the brackets in
Articles 3A.401, 3A.402, and 3A.858; Section (9)(e), Article 6.02;
Section (12)(a), Article 6.02; and Article 15.02, are changed as of
the effective date of this Act and shall be, subject to Subsections
(a) and (b), Section (2) of this Article, changed from time to time
in accordance with the changes in the Consumer Price Index for Urban
Wage Earners and Clerical Workers: U.S. City Average, All Items,
1967=100, compiled by the Bureau of Labor Statistics, United States
Department of Labor, and referred to in this Article as the Index.
The Index for December 1967 is the Reference Base Index period for
the purpose of determining the adjustment to be made in the rate
brackets and ceilings."

§ 341.203. COMPUTATION OF REVISED CEILING OR
BRACKET. (a) The amount of a revised ceiling or bracket is
computed by:
(1) dividing the reference base index into the
consumer price index at the end of the preceding year;
(2) computing the percentage of change under
Subdivision (1) to the nearest whole percent;
(3) rounding the result computed under Subdivision (2)
to the next lower multiple of 10 percent unless the result computed
under Subdivision (2) is a multiple of 10 percent in which event
that result is used; and
(4) multiplying the reference amount of the ceiling or
bracket provided by this subtitle by the result under Subdivision
(3).
(b) If the consumer price index is revised, the revised
index shall be used to compute amounts under this section after that
revision takes effect. If the revision changes the reference base
index, a revised reference base index shall be used. The revised
reference base index shall bear the same ratio to the reference base
index as the revised consumer price index for the first month in
which it is available bears to the consumer price index for the
first month in which the revised consumer price index is available.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

§ 341.204. PUBLICATION OF REVISED CEILING, BRACKET, OR
INDEX INFORMATION. (a) The commissioner shall send the amount of
a revised ceiling or bracket computed under Section 341.203 to the
secretary of state for publication in the Texas Register before May
1 of the year in which the amount of the bracket or ceiling is to
change.
(b) If the consumer price index is revised or superseded,
the commissioner promptly shall send the revised index, the
numerical equivalent of the reference base index under a revised
reference base index, or the designation of the index that
supersedes the consumer price index, as appropriate, to the
secretary of state for publication in the Texas Register.
(c) A court may take judicial notice of information
published under this section.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

SUBCHAPTER D. ADVERTISING REQUIREMENTS

§ 341.301. INFORMATION ABOUT ADVERTISERS. (a) In each
advertisement that purports to offer credit regulated by this
subtitle, Subtitle C, or Chapter 394, the advertiser shall disclose
the legal or registered name of the advertiser and:
(1) shall disclose the street address of the
advertiser's place of business unless the advertisement:
(A) is located on the premises of the
advertiser's place of business; or
(B) is broadcast by radio or television; or
(2) if the advertisement is broadcast by radio or
television, shall:
(A) disclose the telephone number of the
advertiser; and
(B) comply with the applicable disclosure
requirements of 12 C.F.R. Section 226.1 et seq. (Regulation Z).
(b) This section does not apply to:
(1) a federally insured depository institution; or
(2) a person engaged in interstate commerce who
advertises under a generally recognized trade name, abbreviated
form of a trade name, or logo.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

SUBCHAPTER E. PROHIBITIONS AND VIOLATIONS

§ 341.401. DISCRIMINATION PROHIBITED.

See, also, italicized material following text of this section

(a) An authorized lender or other person involved in a
transaction subject to this title may not deny to an individual who
has the capacity to contract an extension of credit, including a
loan, in the individual's name or restrict or limit the credit
extended:
(1) because of sex, race, color, religion, national
origin, marital status, or age;
(2) because all or part of the individual's income
derives from a public assistance program in the form of social
security or supplemental security income; or
(3) because the individual has in good faith exercised
a right under the Consumer Credit Protection Act (15 U.S.C. Section
1601 et seq.; 18 U.S.C. Section 891 et seq.).
(b) In interpreting this section, a court or administrative
agency shall be guided by the Equal Credit Opportunity Act (15
U.S.C. Section 1691 et seq.) and regulations under and
interpretations of that Act by the Federal Reserve Board to the
extent that Act and those regulations and interpretations can be
made applicable to conduct prohibited by this section.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

Amendment by Acts 1997, 75th Leg., ch. 1396, § 6

V.T.C.A., Government Code § 311.031(c) provides, in part, that
the repeal of a statute by a code does not affect an amendment of the
statute by the same legislature which enacted the code and that the
amendment is preserved and given effect as part of the code
provision.

Section 6 of Acts 1997, 75th Leg., ch. 1396, eff. Sept. 1, 1997,
amends Vernon's Ann.Civ.St. art. 5069-2.07 [now this section]
without reference to the repeal of said article by Acts 1997, 75th
Leg., ch. 1008, § 6. As so amended, art. 5069-2.07 reads:

""No authorized lender under Chapter 3A of this Title or other
person involved in transactions subject to this Title may deny an
individual who has the capacity to contract credit or loans in his
or her name, or restrict or limit the credit or loan granted on the
basis of sex, race, color, religion, national origin, marital
status, or age or because all or part of the individual's income
derives from a public assistance program in the form of social
security or supplemental security income, or the individual has in
good faith exercised any right under the Consumer Credit Protection
Act (15 U.S.C. Section 1601 et seq.; 18 U.S.C. Section 891 et
seq.). In interpreting this section, the courts and administrative
agencies shall be guided by the federal Equal Credit Opportunity
Act and regulations thereunder and interpretations thereof by the
Federal Reserve Board to the extent that that Act and those
regulations and interpretations pertain to conduct prohibited by
this section."

§ 341.402. PENALTIES FOR PROHIBITED
DISCRIMINATION. (a) A person who violates Section 341.401 is
liable to the aggrieved individual for:
(1) the actual damages caused by the violation;
(2) punitive damages not to exceed $10,000 in an
action brought by the aggrieved individual; and
(3) court costs.
(b) The liability of a person under this section is instead
of and not in addition to that person's liability under Title VII of
the Consumer Credit Protection Act (15 U.S.C. Section 1691 et
seq.). If the same act or omission violates Section 341.401 and
applicable federal law, the person aggrieved by that conduct may
bring a legal action to recover monetary damages either under this
section or under that federal law, but not both.
(c) In addition to the other liabilities prescribed by this
section, a license issued under this subtitle that is held by a
person who violates Section 341.401 is subject to revocation or
suspension.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

§ 341.403. FALSE, MISLEADING, OR DECEPTIVE
ADVERTISING. (a) A person may not, in any manner, advertise or
cause to be advertised a false, misleading, or deceptive statement
or representation relating to a rate, term, or condition of a credit
transaction, including a loan, regulated under this subtitle,
Subtitle C, or Chapter 394.
(b) If a rate or charge is stated in advertising, the rate or
charge shall be stated fully and clearly.
(c) The finance commission may not adopt rules restricting
advertising or competitive bidding by a license holder regulated by
the Office of Consumer Credit Commissioner except to prohibit
false, misleading, or deceptive practices.
(d) In its rules to prohibit false, misleading, or deceptive
practices, the finance commission may not include a rule that:
(1) restricts the use of any medium for advertising;
(2) restricts the use of a license holder's personal
appearance or voice in an advertisement;
(3) relates to the size or duration of an
advertisement by the license holder; or
(4) restricts the license holder's advertisement under
a trade name, unless the trade name is deceptive.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 1235, § 10, eff. Sept. 1, 2001.

§ 341.404. PROHIBITED ACTS RELATING TO A LOAN. A person
may not perform an act, including advertising, or offer a service
that would cause another to believe that the person is offering to
make, arrange, or negotiate a loan that is subject to this subtitle,
Subtitle C, or Chapter 394 unless the person is authorized to
perform the act or offer the service as:
(1) a credit service organization under Chapter 393;
(2) a pawnbroker under Chapter 371; or
(3) an authorized lender.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

§ 341.405. PENALTY FOR MAKING ILLEGAL OFFER. (a) A
person commits an offense if the person violates Section 341.404.
An offense under that section is a Class C misdemeanor.
(b) A person who violates Section 341.404:
(1) may be prosecuted for the offense; or
(2) may be held liable for:
(A) the penalties under Chapter 349; and
(B) civil penalties assessed by the consumer
credit commissioner.
(c) A person is not subject to both prosecution and the
penalties described by Subsection (b)(2).

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

§ 341.406. WHEN ACT OR OMISSION NOT VIOLATION. An act
or omission does not violate this title if the act or omission
conforms to:
(1) Subchapter C;
(2) a provision determined by the commissioner; or
(3) an interpretation of this title that is in effect
at the time of the act or omission and that was made by:
(A) the commissioner under Section 14.108; or
(B) an appellate court of this state or the
United States.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.

SUBCHAPTER F. LICENSING AND REGULATION IN GENERAL

§ 341.501. STAGGERED RENEWAL. The finance commission
by rule may adopt a system under which licenses under this subtitle
expire on various dates during the year. For the year in which the
license expiration date is changed, the Office of Consumer Credit
Commissioner shall prorate license fees on a monthly basis so that
each license holder pays only that portion of the license fee that
is allocable to the number of months during which the license is
valid. On renewal of the license on the new expiration date, the
total license renewal fee is payable.

Added by Acts 2001, 77th Leg., ch. 1235, § 11, eff. Sept. 1,
2001.

§ 341.502. FORM OF LOAN CONTRACT. (a) A contract for a
loan under Chapter 342, a retail installment transaction under
Chapter 348, or a home equity loan regulated by the Office of
Consumer Credit Commissioner, whether in English or Spanish, must
be written in plain language designed to be easily understood by the
average consumer. The contract must be printed in an easily
readable font and type size.
(b) The finance commission shall adopt rules governing the
form of contracts to which this section applies. The rules must
include model contracts complying with the rules and this section.
(c) A person governed by this section is not required to use
a model contract. The person, however, may not use a contract other
than a model contract unless the person has submitted the contract
to the commissioner. The commissioner shall issue an order
disapproving the contract if the commissioner determines that the
contract does not comply with this section or rules adopted under
this section.
(d) The person may begin using a contract submitted under
Subsection (c) on the date it is submitted for review. If the
commissioner issues an order disapproving the contract, the person
may not use the contract after the order takes effect.
(e) A person may not represent that the commissioner's
failure to disapprove a contract constitutes an approval of the
contract by the commissioner, the Office of Consumer Credit
Commissioner, or the finance commission.

Added by Acts 2001, 77th Leg., ch. 1235, § 11, eff. Sept. 1,
2001.

FINANCE CODE

CHAPTER 303. OPTIONAL RATE CEILINGS

SUBCHAPTER A. RATE CEILINGS: APPLICABILITY, COMPUTATION, AND
PUBLICATION

§ 303.001. USE OF CEILINGS. (a) Except as provided by
Subchapter B, a person may contract for, charge, or receive a rate
or amount that does not exceed the applicable interest rate ceiling
provided by this chapter. The use of a ceiling provided by this
chapter for any contract is optional, and a contract may provide for
a rate or amount allowed by other applicable law.
(b) A contract that is subject to Chapter 342, 345, 347, or
348, including a contract for an open-end account, may, as an
alternative to an interest rate or amount of time price
differential allowed under that chapter, provide for a simple or
precomputed rate or amount of time price differential that does not
exceed the applicable ceiling provided by this chapter or by the
equivalent yield authorized by Chapter 342, 345, 347, or 348.
(c) Except as inconsistent with this chapter, a party to a
contract that is subject to Chapter 342, 345, 347, or 348, or the
party's assignee, has all rights, duties, and obligations under the
applicable chapter, including those relating to refund credits on
prepayment or acceleration.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.002. WEEKLY CEILING. The parties to a written
agreement may agree to an interest rate, or in an agreement
described by Chapter 345, 347, or 348, an amount of time price
differential producing a rate, that does not exceed the applicable
weekly ceiling.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.003. COMPUTATION OF WEEKLY CEILING. (a) The
weekly ceiling is computed by:
(1) multiplying the auction rate by two; and
(2) rounding the result obtained under Subdivision (1)
to the nearest one-quarter of one percent.
(b) The weekly rate ceiling becomes effective on Monday of
each week and remains in effect through the following Sunday.
(c) In this subchapter, "auction rate" means the auction
average rate quoted on a bank discount basis for 26-week treasury
bills issued by the United States government, as published by the
Federal Reserve Board, for the week preceding the week in which the
weekly rate ceiling is to take effect.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999; Acts 1999, 76th Leg., ch. 909, § 2.03, eff. Sept. 1, 1999.

§ 303.004. MONTHLY CEILING. (a) The monthly ceiling
may be used as an alternative to the weekly ceiling only for a
contract that:
(1) provides for a variable rate, including a contract
for an open-end account; and
(2) is not made for personal, family, or household
use.
(b) A contract that provides for the use of the monthly
ceiling may not provide for the use of another rate ceiling provided
under this subchapter.
(c) If the parties agree that the rate may be adjusted
monthly, they may agree that the rate from time to time in effect
may not exceed the monthly ceiling from time to time in effect, and
the monthly ceiling is the ceiling on those contracts.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.005. COMPUTATION OF MONTHLY CEILING. (a) The
consumer[0] credit commissioner shall compute the monthly ceiling on
the first business day of the calendar month in which the rate
applies. The monthly ceiling is effective for one month beginning
on the first calendar day of each month.
(b) The monthly ceiling is computed by averaging all of the
weekly ceilings computed using rates from auctions held during the
calendar month preceding the computation date of the monthly
ceiling.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.006. QUARTERLY CEILING. (a) A written contract,
including a contract that involves an open-end account, may, as an
alternative to the weekly ceiling, provide for an interest rate or
an amount of time price differential producing a rate that does not
exceed the applicable quarterly ceiling.
(b) A variable rate contract authorized under Section
303.015 may not provide for use of both the weekly ceiling and the
quarterly ceiling.
(c) Notwithstanding other provisions of this subchapter,
the rate of interest on an open-end account authorized under
Section 342.455 or 346.003, or an amount owed for a credit card
transaction under another type of credit card agreement, in
connection with which a merchant discount is imposed or received by
the creditor may not exceed the applicable quarterly ceiling.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.007. ANNUALIZED CEILING. The annualized ceiling
may be used as an alternative to the weekly ceiling only for a
written contract that involves an open-end account.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.008. COMPUTATION OF QUARTERLY AND ANNUALIZED
CEILING. (a) On December 1, March 1, June 1, and September 1 of
each year, the consumer[0] credit commissioner shall compute the
quarterly ceiling and annualized ceiling for the calendar quarter
effective the following January 1, April 1, July 1, and October 1,
respectively. The quarterly ceiling becomes effective for
three-month periods beginning on the effective dates set out in
this subsection and is subject to adjustment after each three-month
period. The annualized ceiling becomes effective on each of the
effective dates set out in this subsection and remains in effect for
a period of 12 months, after which it is subject to adjustment.
(b) The quarterly ceiling and annualized ceiling are
computed by averaging all of the weekly ceilings computed using
average auction rates during the three calendar months preceding
the computation date of the ceiling.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.009. MAXIMUM AND MINIMUM WEEKLY, MONTHLY,
QUARTERLY, OR ANNUALIZED CEILING. (a) Except as provided by
Subsection (e), if the rate computed for the weekly, monthly,
quarterly, or annualized ceiling is less than 18 percent a year, the
ceiling is 18 percent a year.
(b) Except as provided by Subsection (c), (d), or (e), if
the rate computed for the weekly, monthly, quarterly, or annualized
ceiling is more than 24 percent a year, the ceiling is 24 percent a
year.
(c) For a contract made, extended, or renewed under which
credit is extended for a business, commercial, investment, or
similar purpose and the amount of the credit extension is $250,000
or more, the 24-percent limitation on the ceilings in Subsection
(b) does not apply, and the limitation on the ceilings determined by
those computations is 28 percent a year.
(d) For an open-end account credit agreement that provides
for credit card transactions on which a merchant discount is not
imposed or received by the creditor, if the rate computed for the
weekly ceiling, monthly ceiling, quarterly ceiling, or annualized
ceiling is more than 21 percent a year, the ceiling is 21 percent a
year.
(e) Repealed by Acts 1999, 76th Leg., ch. 1348, § 5, eff.
Sept. 1, 1999.
(f) In this chapter, "weekly ceiling," "monthly ceiling,"
"quarterly ceiling," or "annualized ceiling" refers to that ceiling
as determined after the application of this section.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999. Amended by Acts 1999, 76th Leg., ch. 1348, § 5, eff. Sept.
1, 1999.

§ 303.010. COMPUTATION OF CEILING IF INFORMATION
UNAVAILABLE. If any of the information required to compute a
ceiling is discontinued or is otherwise not available to the
consumer[0] credit commissioner from the Federal Reserve Board in the
time required for the computation, the ceiling last computed
remains in effect until the information becomes available and a new
ceiling is computed from the obtained information.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.011. PUBLICATION OF RATE CEILINGS. (a) The
consumer[0] credit commissioner shall send the rate ceilings computed
under this subchapter to the secretary of state for publication in
the Texas Register.
(b) The monthly, quarterly, or annualized ceiling shall be
published before the 11th day after the date on which the ceiling is
computed.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.012. JUDICIAL NOTICE. A court may take judicial
notice of interpretations issued by the consumer[0] credit
commissioner or information published in the Texas Register under
Section 303.011.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.013. DETERMINATION OF CEILING FOR CONTRACT TO
RENEW OR EXTEND DEBT PAYMENT. The rate ceiling for a contract to
renew or extend the terms of payment of a debt is the ceiling in
effect under this chapter when the contract for renewal or
extension is made, regardless of when the debt is incurred.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.014. RATE FOR LENDER CREDIT CARD AGREEMENT WITH
MERCHANT DISCOUNT. On an amount owed for a credit card transaction
under a lender credit card agreement that imposes or allows the
creditor to receive a merchant discount, the creditor may not
contract for, charge, or receive:
(1) a rate that exceeds the ceiling provided under
Section 303.006(c); or
(2) a fee or charge that:
(A) is not allowed under Chapter 346; or
(B) exceeds the amount allowed under Chapter 346.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.015. VARIABLE RATE. (a) The parties to a
contract, including a contract for an open-end account, may agree
to any index, formula, or provision of law by which the interest
rate or amount of time price differential will be determined, but
the agreed rate of interest or yield from an amount of time price
differential may not exceed the amount that would be produced by the
rate ceiling applicable to the contract.
(b) A variable contract rate described by this section may
not be used in a contract in which the interest or time price
differential is precomputed and added into the amount of the
contract at the time the contract is made.
(c) A variable rate agreement for credit extended primarily
for personal, family, or household use must include the disclosures
identified for variable rate contracts required by regulations
issued by the Federal Reserve Board under the Truth in Lending Act
(15 U.S.C. Section 1601 et seq.), as amended, except that if that
Act does not apply because of the amount of the transaction, the
following disclosure must be included in a size equal to at least
10-point type that is boldface, capitalized, underlined, or
otherwise set out from surrounding material so as to be
conspicuous:

"NOTICE TO CONSUMER[0]: UNDER TEXAS LAW, IF YOU CONSENT TO THIS
AGREEMENT, YOU MAY BE SUBJECT TO A FUTURE RATE AS HIGH AS 24 PERCENT
PER YEAR."

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.016. CHARGING OF RATE LOWER THAN AGREED RATE. A
creditor may charge an interest rate or amount of time price
differential that is lower than the rate or amount agreed to in the
contract.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

SUBCHAPTER B. OPEN-END ACCOUNTS

§ 303.101. OPEN-END ACCOUNT: CEILINGS. (a) To use the
quarterly or annualized ceiling for setting the interest rate on
current and future open-end account balances, the agreement must
provide for use of the ceiling, and the creditor must give notice of
the interest rate after the date on which the quarterly or
annualized ceiling is computed but before the last day of the next
succeeding calendar quarter.
(b) If the annualized ceiling is used, the rate is effective
for the 12-month period beginning on the date on which the rate
takes effect for the account.
(c) If the quarterly ceiling is used, the rate is effective
for the three-month period beginning on the date on which the rate
takes effect for the account. For an open-end account authorized
under Section 342.455 or 346.003, in connection with which credit
card transactions are authorized or a merchant discount is imposed
or received by the creditor, the quarterly ceiling shall be
adjusted, at the option of the creditor, on:
(1) the effective dates provided by Section 303.008;
or
(2) the first day of the first billing cycle of the
account beginning after those dates.
(d) If a quarterly or annualized ceiling is being used for
an account and if the rate for the applicable period is less than or
equal to the ceiling to be in effect for the succeeding period of
equal length, the creditor may leave that rate in effect for the
succeeding period.
(e) A creditor who has disclosed to an obligor that an
election may be renewed under Subsection (d) is not required to give
additional notice of a renewal under that subsection.
(f) To increase a previously agreed rate, a creditor shall
comply with Section 303.103 before the end of the last calendar
quarter of the period in which the rate previously agreed to is in
effect. The ceiling in effect for that period remains the ceiling
until the parties to the agreement agree to a new rate.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.102. VARIABLE RATE OPEN-END ACCOUNT:
CEILINGS. The applicable rate ceiling for an open-end account
agreement that provides for a variable rate or amount according to
an index, formula, or provision of law disclosed to the obligor,
other than a variable rate commercial contract that is subject to
Section 303.004, is the annualized, quarterly, or weekly ceiling as
disclosed to the obligor. The annualized ceiling shall be adjusted
after each 12-month period, the quarterly ceiling shall be adjusted
after each three-month period, and the weekly ceiling shall be
adjusted weekly.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.103. OPEN-END ACCOUNT: CHANGE OF AGREEMENT
TERM. (a) An agreement covering an open-end account may provide
that the creditor may change the terms of the agreement for current
and future balances of that account by giving notice of the change
to the obligor.
(b) A notice under this section to change a provision of an
account, including the rate, or the index or formula used to compute
the rate, must include:
(1) the new provision, the new rate, or the index or
formula to be used to compute the rate;
(2) the date on which the change is to take effect;
(3) the period for which the change is to be effective
or after which the rate will be adjusted;
(4) a statement of whether the change is to affect
current and future balances; and
(5) the obligor's rights under this section and the
procedures for the obligor to exercise those rights.
(c) A creditor who increases a rate shall include with a
notice required by this section a form that may be returned at the
expense of the creditor and on which the obligor may indicate by
checking or marking an appropriate box or by a similar arrangement
the obligor's decision not to continue the account. The form may be
included on a part of the account statement that is to be returned
to the creditor or on a separate sheet. In addition to the
requirements of Subsection (b), the notice must include:
(1) the address to which the obligor may send notice of
the obligor's election not to continue the open-end account; and
(2) the following statement printed in not less than
10-point type or computer equivalent:

"YOU MAY TERMINATE THIS AGREEMENT IF YOU DO NOT WISH TO PAY THE NEW
RATE."
(d) An obligor is considered to have agreed to a change
under this section if the creditor mails a notice required by this
section to the obligor's most recent address shown in the creditor's
records and:
(1) the obligor chooses to retain the privilege of
using the open-end account;
(2) the obligor or a person authorized by the obligor
accepts or uses an extension of credit after the fifth day after the
date on which the notice is mailed; or
(3) the obligor does not notify the creditor in
writing before the 21st day after the date on which the notice is
mailed that the obligor does not wish to continue to use the
open-end account.
(e) An obligor who rejects a rate change in accordance with
this section is entitled to pay the balance on the open-end account
at the rate and over the period in effect immediately before the
date of the proposed change and under the same minimum payment terms
provided by the agreement. Rejection of a new rate does not
accelerate payment of the balance due.
(f) The procedure provided by this section for changing the
terms of an agreement is in addition to other means of amending the
agreement provided by law.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.104. DISCLOSURE OF DECREASE IN INTEREST RATE NOT
REQUIRED ON OPEN-END ACCOUNTS INVOLVING CREDIT CARD TRANSACTION OR
MERCHANT DISCOUNT. On an open-end account authorized under
Section 342.455 or 346.003, in connection with which credit card
transactions are authorized or a merchant discount is imposed or
received by the creditor and on which interest is charged under this
chapter, the creditor is not required to disclose a decrease in the
applicable interest rate.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.105. OPEN-END ACCOUNT: DISCLOSURE OF CERTAIN RATE
VARIATIONS. (a) Except as provided by Subsection (b), a
variation in an interest rate on an account resulting from
operation of the previously disclosed index, formula, or provision
of law is not required to be disclosed under Section 303.101 or
303.103.
(b) Except as inconsistent with federal law, the creditor on
an open-end account agreement that provides for a variable interest
rate according to an index, formula, or provision of law, that is
primarily for personal, family, or household use, and that is
subject to this chapter shall give to the obligor notice of a change
in the rate resulting from operation of the index, formula, or
provision of law. The notice must be given:
(1) by a document mailed on or before the beginning of
the first cycle for which the change becomes effective; or
(2) on or with:
(A) the billing statement for a billing cycle
that precedes the cycle for which the change becomes effective, if
the account is covered by Section 303.006(c); or
(B) any billing statement, if the account is not
covered by Section 303.006(c).

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.106. OPEN-END ACCOUNT: CEILING FOR PLAN OR
ARRANGEMENT. If a creditor implements a quarterly or annualized
ceiling for a majority of the creditor's open-end accounts that are
under a particular plan or arrangement and that are for obligors in
this state, that ceiling is also the ceiling for all open-end
accounts that are opened or activated under that plan for obligors
in this state during the period that the election is in effect.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

SUBCHAPTER C. PROVISIONS APPLICABLE TO CERTAIN CONSUMER[0] LOANS[0] AND
SECONDARY MORTGAGE LOANS[0]

§ 303.201. LICENSE REQUIRED. A person engaged in the
business of making loans[0] for which the rate is authorized under this
chapter must obtain a license under Chapter 342 unless the person is
not required to obtain a license under Section 342.051.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.202. APPLICABILITY OF SUBTITLE B. Except as
inconsistent with this chapter:
(1) a person engaged in the business of extending
open-end credit primarily for personal, family, or household use
and who charges on an open-end account a rate or amount under
authority of this chapter is subject to the applicable chapter in
Subtitle B; and
(2) a party to an account described by Subdivision (1)
or the party's assignees have all the rights, duties, and
obligations under that applicable chapter.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

SUBCHAPTER D. LIMITATIONS ON APPLICABILITY OF CHAPTER

§ 303.301. AGREEMENT TO WHICH CHAPTER DOES NOT
APPLY. The rate ceilings provided by this chapter do not apply to
an agreement:
(1) under which credit is extended by the seller, or an
owner, subsidiary, or corporate affiliate of the seller, for a
transaction governed by Chapter 39, Business & Commerce Code; and
(2) that is secured by a lien on the obligor's
homestead.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.302. REQUIREMENTS INCONSISTENT WITH FEDERAL
LAW. (a) A person is not required to comply with a disclosure or
notice requirement of this chapter that is inconsistent with
federal statute or regulation.
(b) A creditor may modify a disclosure or notice requirement
of this chapter to conform to federal law.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

SUBCHAPTER E. ENFORCEMENT

§ 303.401. WHEN ACT OR OMISSION NOT VIOLATION. An act
or omission does not violate this title if the act or omission
conforms to an interpretation of this title that is in effect at the
time of the act or omission and that was made by:
(1) the consumer[0] credit commissioner under Section
14.108; or
(2) an appellate court of this state or the United
States.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.402. PENALTY FOR VIOLATION OF CHAPTER FOR CERTAIN
CONTRACTS SUBJECT TO SUBTITLE B. (a) A person who contracts for,
charges, or receives under a contract subject to Chapter 342, 345,
346, 347, or 348, including a contract for an open-end account, a
rate or amount of time price differential that exceeds the maximum
applicable rate or amount authorized by the applicable chapter or
this chapter is subject to a penalty for that violation determined
under Chapter 349.
(b) For a contract described by Subsection (a) that contains
a rate or amount authorized under this chapter, the failure to
perform a duty or comply with a prohibition provided by this chapter
is subject to Chapter 349 as if this chapter were in Subtitle B.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.403. PENALTY FOR VIOLATION OF CEILING IN CERTAIN
CONTRACTS. A written contract, other than a contract to which
Section 303.402 applies, that directly or indirectly provides for a
rate that exceeds the rate authorized by this chapter and that is
not otherwise authorized by law, is subject to the penalty
prescribed by Chapter 305.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.404. ENFORCEMENT BY CONSUMER[0] CREDIT
COMMISSIONER. Subject to Subchapter B, Chapter 341, the consumer[0]
credit commissioner shall enforce Subtitles B and C as they apply to
contracts subject to those chapters.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.405. EXAMINATION OF RECORDS; INSPECTIONS;
RULES. (a) Section 342.552 applies to a transaction:
(1) that is made by a person who holds a license under
Chapter 342;
(2) that is subject to Chapter 342 or 346; and
(3) the rate of which is authorized by this chapter.
(b) Subchapter L, Chapter 342, applies to a loan[0]:
(1) that is subject to Chapter 342; and
(2) the rate of which is authorized by this chapter.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.406. ENFORCEMENT BY CREDIT UNION
COMMISSIONER. The credit union commissioner shall enforce this
chapter as it applies to contracts subject to Subtitle D, Title 3.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.407. ENFORCEMENT BY DEPARTMENT OF INSURANCE. The
Texas Department of Insurance shall enforce this chapter as it
applies to contracts subject to Chapter 24, Insurance Code.

Added by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

SUBCHAPTER F. EFFECT ON OTHER STATUTES OF USING OPTIONAL RATE

§ 303.501. APPLICABILITY OF CREDIT UNION ACT. Except as
inconsistent with this chapter:
(1) a person subject to Subtitle D, Title 3, who
contracts for, charges, or receives a rate or amount authorized by
this chapter remains subject to that subtitle; and
(2) a party to a transaction described by Subdivision
(1) has all the rights provided by that subtitle.

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.

§ 303.502. APPLICABILITY OF CHAPTER 24, INSURANCE
CODE. (a) Except as inconsistent with this chapter:
(1) a person subject to Chapter 24, Insurance Code,
who contracts for, charges, or receives an interest rate authorized
by this chapter remains subject to that chapter; and
(2) a party to an insurance premium finance agreement,
including an agreement for an open-end account, has all the rights
provided by Chapter 24, Insurance Code.
(b) The licensing requirements of Chapter 342 do not apply
to a transaction described by Subsection (a)(1). The penalty
provisions of this title do not apply to a transaction described by
Subsection (a)(1).

Amended by Acts 1999, 76th Leg., ch. 62, § 7.18(a), eff. Sept. 1,
1999.