Bill
HB 508
NC HB 508 lowers the max monthly rate for open-end/credit-card plans from 1.5% to 1.17% (roughly 18% to 14.04% APR), effective Oct 1, 2025, with added consumer protections.
Status & Effective Date
- Title: Lower Cap on Credit Card Interest.
- Jurisdiction: North Carolina.
- Effective date: October 1, 2025. Applies to interest, finance charges, and fees charged on or after that date.
Purpose / Intent
- To reduce the maximum allowable monthly periodic interest rate that may be charged on certain open‑end (credit card) accounts and to make related technical and consumer‑protection clarifications in G.S. 24‑11.
Key provisions and changes
- Lowers the maximum monthly periodic rate allowed on many open‑end credit or similar plans (including revolving credit card plans) from 1.5% per month to 1.17% per month.
- Practical effect: the cap moves from roughly 1.5% × 12 = 18% APR to ≈1.17% × 12 = 14.04% APR.
- Continues to allow an annual fee up to $24.00 on such accounts; alternatively, if no annual fee is charged, a lender may impose a service charge up to $2.00 per month on accounts not paid in full within 25 days of billing.
- Retains existing limit that no purchaser may charge a discount/fee greater than 6% of the principal amount on accounts acquired from vendors or service participants in the plan.
- Subsection (b) (revolving credit loans made directly by a bank or other lender) remains subject to a monthly periodic rate not to exceed 1.5% if agreed in writing — i.e., the bill narrows the cap primarily for open‑end/credit‑card style plans, not all revolving loan products.
- Other technical and consumer protection provisions retained or clarified:
- Definition and use of “billing date” and requirement that billing statements be mailed at least 14 days before due date.
- Late payment charge limits: up to $5 for accounts with outstanding balance < $100 and up to $10 for balances ≥ $100, with the late charge never to exceed the outstanding principal.
- Requirements for imposing an annual or service charge on an existing account (30 days’ conspicuous notice; cardholder’s right to decline and pay off balance), and prorated refund entitlement if cardholder rescinds and surrenders cards within 12 months of initial annual fee imposition.
Who is affected
- Consumers (cardholders) in North Carolina: likely to see lower maximum interest costs on covered credit card/open‑end accounts after Oct 1, 2025.
- Issuers and lenders offering open‑end/credit‑card plans: will need to ensure product pricing, disclosures, and contracts comply with the new monthly cap and related notice/fee rules; may adjust fees, underwriting, credit limits, or product availability in response.
- Banks, nonbank lenders, retailers, and debt purchasers: affected to the extent they originate, service, or buy accounts governed by G.S. 24‑11.
- Regulators and courts: enforcement and interpretation will be needed (e.g., distinguishing open‑end card plans from other revolving loans).
Potential impacts and considerations
- Consumer benefit: lower allowable caps reduce maximum interest consumers can be charged on many credit card accounts (from ~18% APR to ~14% APR).
- Market response: issuers may respond by increasing permitted fees within statutory limits, tightening credit availability, raising underwriting standards, or shifting more costs to other product features.
- Legal/operational: lenders must update disclosures, billing systems, and account agreements; potential need for guidance on scope (which products qualify as “open‑end credit or similar plans”) and interaction with federal law/regulation.
Notes
- The bill includes several technical edits and retained rules from the existing statute; the most consequential substantive change is the monthly periodic rate cap reduction for certain open‑end accounts.
Compiled from official sources — confirm details with the bill’s official record.
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