Requires that an issuer in the state of New York must offer a credit card that does not permit cash advances.

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S4298-2011 Actions

• Jan 4, 2012: REFERRED TO CONSUMER PROTECTION
• Mar 28, 2011: REFERRED TO CONSUMER PROTECTION

S4298-2011 Memo

BILL NUMBER:S4298

TITLE OF BILL:

An act
to amend the general business law, in relation to the issuance of credit
cards

PURPOSE:

Enactment of this legislation would require entities issuing credit
cards in New York State to also offer a credit card option which does
not permit the use of cash advances.

SUMMARY OF PROVISIONS:

Section 1 amends Section 515 of the general business law, as amended
by chapter 1050 of the laws of 1971 by stating that any entity
issuing a credit card in this state must office a credit card option
which does not permit the use of cash advances.

EXISTING LAW:

No such provision exists under existing law.

JUSTIFICATION:

Paying with a credit card is an easy way to make purchases, but using
a card wisely and paying bills on time also helps in building a good
credit history, and that helps in establishing other types of credit.
In fact, people with good credit generally receive the best rates and
terms on mortgages and other loans.

Credit cards that offer advances usually first time card holders,
obtain cash from a bank or ATM. This cash may in turn used to buy
drugs or other illegal goods.

In most cases, when a credit card is used to withdraw cash, higher
fees come into play.

* a cash advance fee is normally an upfront fee 2% to 4% of the cash
advanced.
* the cash advance on the credit card always has a higher
interest rate than that applied to normal purchases.
* the interest starts as soon as you get the money out of the
ATM or from the bank teller.
* many of the credit card companies also require that you
payoff all the balance from your purchases before you begin to payoff
your cash advance.
* the average cash advance rate is 21.65% on all cards.

Banks and other entities say that cash advances are a risky business
they cost more to process and frequent users are more likely to default.
In fact, those that utilize the cash advance features are likely to
either make their payment late (Which results in a late fee or a hike
in interest rates) or default entirely, thereby ruining their future
credit Scores.

However, may responsible parents may want to provide their children
with the security that a credit card offers. By requiring financial
institutions to issue a credit card with an option to prohibit cash
advances parents have the ability to protect their children, their
credit ratings and their well being.

LEGISLATIVE HISTORY:

S.1950 2008 - Referred to Consumer Protection.

FISCAL IMPLICATIONS:

None.

LOCAL FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect immediately.

S4298-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    4298

                         2011-2012 Regular Sessions

                              I N  SENATE

                               March 28, 2011
                                 ___________

  Introduced  by Sen. CARLUCCI -- read twice and ordered printed, and when
    printed to be committed to the Committee on Consumer Protection

  AN ACT to amend the general business law, in relation to the issuance of
    credit cards

    THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section  1.  Section  515  of  the general business law, as amended by
  chapter 1050 of the laws of 1971, is amended to read as follows:

    S  515.  Issuance  of  credit  cards.  1.  Notwithstanding  any  other
  provision  of  law,  no person shall issue a credit card in violation of
  the provisions of an act of congress entitled "Truth in Lending Act" and
  the regulations thereunder, as such act and regulations may from time to
  time be amended.
    2. AN ISSUER IN THE STATE OF NEW YORK MUST ALSO OFFER  A  CREDIT  CARD
  OPTION WHICH DOES NOT PERMIT THE USE OF CASH ADVANCES.
    3.  The  issuance  of  a credit card in violation of the provisions of
  subdivision one OR TWO of this section shall constitute a misdemeanor.
    S 2. This act shall take effect immediately.





   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD07472-01-1