Proposed ‘all-in’ rate cap would reduce access to credit

July 15, 2021

A Senate bill introduced Thursday could reduce access to credit from reputable lenders, said CUNA President/CEO Jim Nussle in a statement. The bill would cap fees and interest for all consumer loans at a 36% “all-in” annual percentage rate (APR).

“Credit unions have seen firsthand the financial harm caused by high cost loans, which is why CUNA and Leagues have supported efforts to end ‘rent-a-bank’ loopholes, called on the CFPB to focus its Payday Rule on high-interest lenders, and have encouraged the effective enforcement of state and federal law,” Nussle said. “However, the establishment of a national all-in rate cap applicable to all creditors is an unproven one-size-fits-all policy, the consequences of which will likely include reduced access to credit from reputable lenders.”

The cap would apply to all open-end and closed-end consumer credit transactions, including payday loans, car title loans, overdraft loans, credit cards, car loans, mortgages, and refund anticipation loans. The 36% APR is the same limit currently in place under the Military Lending Act.