205 ILCS 675/8.5

(205 ILCS 675/8.5)

Sec. 8.5. Amendment of agreement governing credit card accounts.

(a) Amendment of terms. If the agreement governing a credit card account so provides or allows, then a financial institution may at any time or from time to time amend the terms of such agreement in accordance with the further provisions of this Section. The financial institution shall notify each affected borrower of the amendment in the manner set forth in the agreement governing the credit card account and in compliance with the requirements of the Truth-in-Lending Act and regulations promulgated thereunder, as in effect from time to time, if applicable. The provisions of Section 8 of this Act shall not apply to the amendment of the terms of the agreement governing the credit card account.

(b) Interest rate increase limited to future transactions. An agreement governing a credit card account may be amended to increase the interest rate on future transactions which may take effect not less than 45 days after notice of the rate increase is provided to the borrower. The interest rate may only be applied to transactions that occur more than 14 days after provision of the notice to the borrower. The notice to the borrower shall disclose the interest rate applicable to new transactions, the date the interest rate will commence, the transactions subject to the increased interest rate, and the transactions subject to the current interest rate. A financial institution may not increase the interest rate under this subsection during the first year after the credit card account is opened.

(c) Advance notice and right to reject an increase in fees or charges. An agreement governing a credit card account may be amended to increase fees or charges on or after an effective date that is at least 45 days after provision of a notice to the borrower, provided a financial institution may not increase fees or charges on a credit card account during the first year after the credit card account is opened. The notice to the borrower shall:

(1) describe the change in terms contained in the amendment;

(2) set forth the effective date of the amendment;

(3) state that the borrower may reject the amendment prior to the effective date of the amendment;

(4) provide an address to which the borrower may send notice of the borrower's election not to accept the amendment and include an addressed postcard that the borrower may return to the financial institution for that purpose, or provide a toll-free telephone number the borrower may use to notify the financial institution of the borrower's rejection of the amendment; and

(5) if applicable, a statement that if the borrower rejects the amendment, then the borrower's ability to use the account for further advances will be terminated or suspended.

(d) Interest rate increase applicable to current balances. A financial institution may not increase the interest rate on the outstanding unpaid indebtedness under a credit card agreement, except as permitted in the following:

(1) Temporary rate exception. A financial institution may increase a promotional interest rate upon the expiration of a specified period of time of at least 6 months, provided that prior to the commencement of that period, the financial institution has disclosed to the borrower the length of the period and the increased interest rate that would apply after the expiration of the period.

(2) Variable rate exception. A financial institution may increase the interest rate of a variable rate credit card account, established in accordance with the provisions of Section 5 of this Act, resulting from increases in an index that is not under the financial institution's control and is available to the general public.

(3) Workout and temporary hardship exception. If an interest rate is reduced pursuant to a workout or temporary hardship arrangement, then the interest rate may be increased to the interest rate in effect prior to the reduction due to completion of the workout or temporary hardship arrangement by the borrower or the failure of the borrower to comply with the terms of the workout or temporary hardship arrangement, provided the financial institution has furnished the borrower with a clear and conspicuous disclosure of the terms of the arrangement prior to commencement of the arrangement.

(4) Delinquency exception. A financial institution may increase the interest rate if the borrower's required minimum payment has not been received by the financial institution within 60 days after the due date for the payment, provided that after the minimum payment is 60 days delinquent a notice is furnished to the borrower 45 days prior to the effective date of the increase stating the reason for the increase and that the increase will terminate not later than 6 months after the effective date of the increase if the financial institution receives the required minimum payments on time during that 6 month period.

(5) Servicemember's Civil Relief Act exception. If an interest rate is decreased due to the provisions of 50 U.S.C. App. 527 of the Servicemembers Civil Relief Act, then the financial institution may increase the interest rate once those provisions no longer apply, provided the financial institution may not apply to any transactions that occurred prior to the decrease an interest rate greater than the interest rate applied prior to the decrease.

(e) Universal default prohibited. A financial institution may not impose an unfavorable change in the interest or other charges on a credit card account which: (i) relates to a change in the borrower's credit standing, (ii) does not affect all or a substantial portion of a class of the creditor's accounts, and (iii) does not relate to inactivity, default, or delinquency on that credit card account.

(f) Any borrower who gives a timely notice under subsection (c) of this Section rejecting an amendment to increase fees or charges shall be permitted to pay the outstanding unpaid indebtedness in the borrower's credit card account, in accordance with the terms of the agreement governing the credit card account without giving effect to the amendment.

(g) For purposes of this Section, the following shall not be deemed an amendment that has the effect of increasing the interest to be paid by the borrower:

(1) a decrease in the required amount of periodic installment payments; and

(2) a change from a daily periodic rate to a periodic rate other than daily, or from a periodic rate other than daily to a daily periodic rate, provided that there is no resulting change in the annual percentage rate as determined in accordance with the Truth-in-Lending Act and regulations promulgated thereunder, as in effect from time to time.

(Source: P.A. 96-1193, eff. 7-22-10.)