Wisconsin Consumer Act: Credit Agreement

Before the first transaction is entered into, the creditor must disclose the following to the customer in a single written instrument:

1. The conditions under which a finance charge may be imposed, and any time period (grace) within which the entire balance may be paid to avoid a finance charge;
2. The method of determining the balance on which a finance charge may be imposed;
3. The method of determining the amount of the finance charge;
4. The periodic rate as well as the corresponding annual percentage rate of the finance charge (the terms "finance charge" and "annual percentage rate" must be made more conspicuous);
5. The minimum payment required (the amount in the sample form is just an example);
6. The amount of any other charges that may be imposed in addition the finance charge;
7. Any security interest which will be taken under the agreement;
8. The customer’s rights to dispute billing errors (see sample billing statement).

The sample uses the "adjusted balance" method of determining the amount on which the finance charge is calculated. A creditor may use the "average daily balance" or the "median balance" methods.

The sample agreement form does not list any additional charges which are allowed in an open-end credit agreement. The following four example provisions show how to contract for some of the typical charges that are found in open-end credit agreements:

A charge not to exceed $10 in any billing cycle in which the creditor does not receive at least the minimum payment due on or before the due date.

1. An annual membership fee of $10.
2. A charge of $10 in any billing cycle in which the customer exceeds the credit limit established in the agreement.
3. A charge not to exceed $15 for each check received for payment under the open-end credit plan which is dishonored because the check writer does not have an account, sufficient credit, or sufficient funds in the account with the financial institution on which the check is written.

If a merchant wishes to contract for any of these charges, they must be listed under a heading, such as "Additional Charges," in the account agreement.