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NAFCU, trades voice concerns about legislation to impose 36% interest rate cap
NAFCU and a group of financial trade organizations wrote to the Senate Banking Committee Friday to share concerns on pending legislative measures that would propose the imposition of a national "fee and interest rate cap" of 36 percent, effectively imposing a limit to the fees and interest charged on consumer loans. The letter was sent ahead of a Senate Banking Committee scheduled for this Thursday to examine legislation that would create an expansion of the 36 percent all-in military interest rate cap to all consumer loans.
"Small dollar loans, credit cards, and other forms of short-term credit are critical to help people meet emergency expenses, disruptions in pay, and misalignments in the timing of their expenses and income," wrote the organizations. "The proposed 36% fee and interest cap would make it more difficult for many consumers to obtain credit, thereby harming the very consumers the legislation seeks to protect."
A representative from Essential Federal Credit Union, a NAFCU-member credit union in Plaquemine, La., is scheduled to be a witness at the hearing.
NAFCU will monitor the hearing and continue to provide credit unions with updates on any movement on this topic via NAFCU Today.