2782

LAWS OF MARYLAND

Ch. 732

12-505.

(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE
MEANINGS INDICATED.

(2) "ACTUARIAL METHOD" MEANS THE METHOD OF ALLOCATING
PAYMENTS MADE ON A LOAN BETWEEN THE OUTSTANDING PRINCIPAL BALANCE
OF THE LOAN AND INTEREST, BY WHICH A PAYMENT IS APPLIED FIRST TO
THE ACCUMULATED INTEREST, AND THE REMAINDER IS SUBTRACTED FROM
THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN.

(3) "PRECOMPUTED INTEREST CHARGE" MEANS INTEREST AS
COMPUTED BY ADD ON, DISCOUNT, OR OTHER SIMILAR METHOD.

[(a)] (B) In a closed end account, the finance charge
may not exceed the greater of:

(1)  An amount computed using the following annual
simple interest rates of finance charge:

(i) 22 percent on that part of the outstanding
balance not exceeding $1,000; and

(ii) 18 percent on that part of the outstanding
balance exceeding $1,000; or

(2)  A minimum charge of $10 or, if the due date of
the last installment is eight months or less after the effective
date of the retail credit account agreement, $8.

(3)  Notwithstanding the provisions of paragraph (1)
of this subsection, in a closed end account made on or after July
1, 1982, the finance charge may not exceed 24 percent per annum
simple interest.

[(b)] (C) (1) In a closed end account, the finance
charge may be computed:

(i) On the actual unpaid principal outstanding
from time to time; or

(ii) In advance, at the time the purchase is
made, by adding to the original unpaid balance the amount of
finance charge that would be earned if the account were repaid
exactly according to its terms at the rate stated in subsection
(a) of this section.

(2) Nothing in this section shall be construed to
prohibit any particular method of computing the finance charge on
a closed end account so long as the amount of the finance charge
does not result in a rate of charge in excess of that permitted
by subsection (a) of this section.