<p class=ldtitle>A BILL to amend the Code of Virginia by adding in Article 4 of Chapter 4 of Title 6.2 a section numbered 6.2-435.1, relating to financial services; open-end credit plans; promotional annual percentage rates.</p>
Summary
HB725 would add a new section to Virginia’s consumer credit laws governing open-end credit plans that offer more than one promotional annual percentage rate. The bill defines key terms such as promotional annual percentage rate, promotional balance, promotional period, and expiration date, tying the general meaning of annual percentage rate to the federal Truth in Lending Act.
The core rule in the bill requires a creditor, when a consumer has multiple promotional APR balances on the same open-end account, to apply payments to the promotional balance with the earliest expiration date first, unless the consumer and creditor expressly agree otherwise in writing. In practical terms, this is a payment-allocation rule intended to determine how payments are credited during overlapping promotional-rate offers, such as introductory financing periods on revolving credit accounts.
Impact
If enacted, HB725 would amend Title 6.2 of the Code of Virginia by creating a new consumer finance provision applicable to creditors offering open-end credit plans with multiple promotional APRs. It would affect how payments are allocated on revolving accounts such as credit cards or similar credit lines, potentially influencing billing practices, account servicing, and consumer repayment outcomes during promotional-rate periods. The bill would not appear to change the underlying APR definitions themselves, but would impose a default payment-ordering rule unless the parties contract around it in writing.
Sentiment
The available legislative history suggests little opposition at the subcommittee stage. The bill was recommended to be struck from the docket by a 9-0 vote, which indicates unanimous support for that procedural action, though the context does not show whether that reflects approval, a desire to defer consideration, or another committee practice. No committee transcript is available, so there is no recorded debate to indicate broader support or criticism.
Contention
The main policy issue appears to be whether creditors should be required to apply payments to the earliest-expiring promotional balance first, or whether account terms should control. Potential points of contention include the administrative burden on lenders, the effect on how consumers benefit from overlapping promotional offers, and whether the default rule should be mandatory or waivable by written agreement. Because no transcript is available, no specific member or stakeholder objections are identified in the record provided.