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As urged by NAFCU, the NCUA Board on Thursday voted to keep the federal credit union loan rate ceiling at 18 percent through March 10, 2017. The board voted 3-0 in taking the action.

Without board action, the ceiling was set to revert to the statutory maximum of 15 percent in September. The extension of the loan interest-rate cap of 18 percent applies to most federal credit union loans.

NCUA noted that almost two-thirds of federal credit unions offer products that would be affected by a potential reduction in the ceiling, which would then reduce loan volume and reduce earnings.

NCUA Board Chairman Debbie Matz said, "In my view, the most important reason to prevent the current rate ceiling from falling is to allow federal credit unions to continue serving borrowers with low credit scores and providing needed access to short-term credit … If the rate ceiling was reduced to 15 percent, I know, from first-hand experience working in a federal credit union, it would be difficult to cover the costs of such short-term loans."

NAFCU President and CEO Dan Berger urged the NCUA Board to keep the rate ceiling at 18 percent in a letter earlier this month; he wrote that lowering the rate "could discourage federal credit unions from making loans or approving credit card applications for higher-risk members."

The 15 percent cap is established by the Federal Credit Union Act, but the law gives the NCUA Board the ability to raise the limit for 18-month periods – which it has done consistently since May 1987. Credit union Payday Alternative Loans (PAL loans) are not covered by the 18 percent cap, and are instead capped at 28 percent.