Attorney General Opinions and Advisory Letters

Opinion No. 80-27

August 6, 1980

OPINION OF: Jeff Bingaman, Attorney General

BY: Jill Z. Cooper, Deputy Attorney General

TO: The Honorable Vernon N. Kerr, New Mexico State Representative, 113 Sherwood Boulevard, Los Alamos, New Mexico 87544

COMMERCIAL INSTRUMENTS & TRANSACTIONS

The assessment of an annual fee for the use of consumer credit cards is not in violation of statutory interest limits.

QUESTIONS

Is the assessment of an annual fee for the use of consumer credit cards a violation of statutory interest limits?

CONCLUSIONS

No.

ANALYSIS

The New Mexico Bank Installment Loan Act of 1959, Sections 58-7-1 to 58-7-9 NMSA 1978, regulates the amount of interest which may be charged on credit card installment loan transactions. It also provides that "no additional amount shall be charged or contracted for, directly or indirectly, on, or in connection with, any such installment loan" except for the specific charges enumerated therein. Section 58-7-6. No exception is authorized for annual fees but then, an annual fee is not a charge made "on, or in connection with" an installment loan. That is, an annual fee charged solely for the privilege of obtaining a credit card, regardless of whether the card is used in a loan transaction, is not to be considered a finance charge. See, FRB Regulation Z Interpretations Section 226.407, 12 CFR Section 226.407.

OPINION

Thus, we would advise that the annual fee charged for obtaining a bank credit card is not, in itself, illegal in New Mexico.

ATTORNEY GENERAL

Jeff Bingaman, Attorney General