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Washington
Durbin bill would set 36 APR consumer credit cap
WASHINGTON (7/22/08)—Sen. Richard Durbin (D-Ill.) introduced legislation late last week that would set a federal usury cap of 36% APR on all consumer credit transactions. Durbin, who is Senate Majority Whip, said his bill is intended to eliminate “the excessive rates that some consumers are charged for payday loans, car title loans and other types of credit.” “Within blocks of my home in Springfield, Illinois, there are payday lenders charging interest rates of two and three hundred percent of the value of the loan,” Durbin said in a release. “These excessive rates are often hidden and can have crippling effects on those individuals who can afford it least. Congress must enact protections against predatory lending. America’s working families depend on it.” Called the Protecting Consumers from Unreasonable Credit Rates Act, the bill’s lending cap takes into account all interest, fees, defaults, and other finance charges. The bill clarifies that the cap does not preempt any stricter state laws. Durbin noted that his proposed cap is similar to usury caps already enacted in many states and is the same as the cap already in place for military personnel and their families.


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