Sen. Durbin Renews Push for Across-the-Board Consumer Loan Interest Rate Cap (April 11, 2013)
Renewing a push to crack down on “excessive interest rates and fees,” U.S. Sen. Dick Durbin (D-Ill.) and four other senators this week reintroduced a bill to cap interest rates on all credit transactions at 36 percent. The legislation, also proposed last year, mirrors a similar bill Durbin championed in 2009, that would align interest rate caps at 36 percent for all credit products, including payday loans, car title loans, tax refund anticipation loans, credit cards and mortgages with existing limits already in place for U.S. military personnel and their families. If enacted, the Protecting Consumers from Unreasonable Credit Rates Act would put an end to certain consumer lending practices, particularly payday loans, resulting in “excessive rates which can top 300 percent,” Durbin said. Durbin successfully pushed for an amendment regulating debit card interchange that went into effect last year.
The credit interest cap Durbin proposes is higher than one several U.S. representatives proposed last year in a different bill. Rep. John Tierney (D-Mass.) and 12 other lawmakers in 2012 introduced the National Credit Card Usury Rate Bill, which would cap all credit card interest rates at 16 percent. That bill failed to advance in Congress. In a press release outlining his latest bill, Durbin said the proposed credit-cap legislation takes aim at unfair lending operations “by setting a relatively high interest rate as the cap and applying that cap to all credit transactions,” thus defining “predatory” lending to “put all consumer transactions on the same, sustainable path,” Durbin said. The average U.S. credit card this week carries a 14.95 percent APR, based on data CreditCards.com compiles weekly by analyzing the 100 most popular U.S. credit cards. Overall credit card interest rates this week ranged from 10.29 percent to 23.64 percent, the service said.
