CUNA News
  • LOG IN
  • Create Account
  • Sign Out
  • My Account
  • LOG IN
  • Create Account
  • Sign Out
  • My Account
  • Credit Union Magazine
    • Buyers' Guide
    • Digital Edition
    • Credit Union Hero
    • Credit Union Rock Star
    • Subscribe
    • Advertise
    • Contact
  • Advertise
  • Topics
    • Community Service
    • Compliance
    • Credit Union Hero
    • Credit Union Rock Star
    • Credit Union System
    • Directors
    • Human Resources
    • Leadership
    • Lending
    • Marketing
    • Operations
    • Policy & Issues
    • Sales & Service
    • Technology
  • Awards
    • Nominate Credit Union Hero
    • Nominate Credit Union Rock Star
  • Podcasts
  • Videos
  • Jobs
  • Contact

News

Home » ‘All-in’ 36% rate cap would have ‘seismic’ effect on credit cards, loans
Policy & Issues

‘All-in’ 36% rate cap would have ‘seismic’ effect on credit cards, loans

July 29, 2021
Cap1

Adoption of a 36% “all-in” interest rate cap would have a “seismic” impact on credit cards and small-dollar loans, CUNA wrote to the Senate Banking, Housing, and Urban Affairs Committee Thursday. The committee conducted a hearing on extending the 36% rate cap for members of the military to everyone.

“Adoption of a 36 percent all-in cap will essentially require lenders to offer larger, longer duration loans because these loans are ‘easier’ to fit under the cap precisely due to their increased size and duration,” the letter reads. “This effectively encourages borrowers to take on more debt or, for many borrowers with lower creditworthiness, push them out of the market for small dollar credit altogether.”

The letter adds that credit unions have seen firsthand the harms caused by high-cost payday loans and underregulated lenders, and support efforts to curb these abuses.

“Because credit unions tailor products to meet the unique needs of their members, there are many other consumer-friendly credit union products that would also be affected or eliminated by a 36% all-in rate cap as proposed in the legislation,” the letter reads. “Credit unions’ propensity for transparency and fairness is reinforced by their not-for-profit, democratically controlled structure. This accountability culture and member-first ethos are the reasons why credit unions – both state and federal charters – are widely considered to be pro-consumer alternatives to high-cost payday lenders.”

CUNA sent the letter in conjunction with the National Association of Federally Insured Credit Unions.

Credit Union Magazine: Summer 2023

Summer 2023

Credit Union Magazine’s Summer 2023 issue highlights the lending outlook for the rest of the year, how credit unions leverage fintech companies to boost digital lending, the power of lending partnerships, common Bank Secrecy Act violations, and the shift board members must make when becoming chair.
Digital Edition •  Subscribe

Trending

  • CUNA, League, credit union-opposed interchange bill reintroduced

  • CUNA, Leagues issue action alert in opposition to interchange bill

  • CUNA urges Congress to oppose interchange legislation

Tweets by CUNA_News

Polls

Do you think ChatGPT will become useful for credit unions?

View Results
More

Champion for the Credit Union Movement

Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.

More CUNA

  • Membership
  • Contact Us
  • Careers

Resources for

  • Credit Union Advocates
  • Leagues
  • Press
  • Providers

Our Affiliates

  • American Association of Credit Union Leagues (AACUL)
  • Credit Union Awareness
  • Credit Union House
  • CUNA Strategic Services
  • National Credit Union Foundation
GET CUNA UPDATES
© 2023 Credit Union National Association | ADA Compliance Notice & Legal
Email Us