• Consumer Lending
  • August 10, 2017 | Authors: Christia A. Pritts; Lawrence D. Coppel; Andrew D. Bulgin; Marjorie A. Corwin; Peter B. Rosenwald; D. Robert Enten; David S. Musgrave; Robert A. Gaumont; Christopher R. Rahl; Bryan M. Mull; Chastity E.C. Threadcraft
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • Unsecured Open End Consumer Credit Plans – Fees and Charges
    SB527 / HB1270 (Chapters 723 and 724)
    (effective July 1, 2017)

    These Acts limit certain fees and charges permitted for unsecured open end credit plans extended to consumer borrowers. Under existing law, creditors that extend credit under Maryland’s Credit Grantor Revolving Credit Provisions (Subtitle 9) may impose an annual charge (in any amount) for the privilege of accessing the plan, a transaction charge for each advance under the plan, and a minimum charge for each billing period where there is an outstanding unpaid balance. Under existing law, these charges are not treated as interest and, thus, are not subject to the maximum 24% annual simple interest rate permitted under Subtitle 9. The Acts provide that these charges, when combined with any interest charged under the plan, may not exceed an effective rate of simple interest of 33% per year.

    Practice Point: Lenders extending open end credit under Subtitle 9 should examine charges to ensure that if they are imposing charges identified in these Acts, such charges, when combined with interest under the plan, do not cause the rate to exceed the new 33% simple interest rate cap. Lenders whose existing Maryland loan programs include the identified charges need to re-evaluate their lending programs in Maryland. The Commissioner of Financial Regulation intends to enforce this new rate limit beginning July 1, 2017 for new revolving credit plans.