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CR calls on Senate to protect consumers from predatory lenders by passing the Veterans and Consumers Fair Credit Act

Senate Banking Committee holding hearing today on bill that caps interest rates

WASHINGTON, D.C. – Consumer Reports urged the Senate Banking Committee in a letter today to approve a bill that would protect consumers from predatory lending by establishing a federal usury limit.  The Veterans and Consumers Fair Credit Act would extend a 36 percent interest rate cap that is already in effect for loans provided to active duty servicemembers so that it applies to all Americans. The legislation will be the subject of a Senate Banking Committee hearing today at 10am ET.

CR’s letter points out that payday loans are marketed as lifelines to some of the most financially fragile Americans, but are structured in a way that keeps them trapped in cycles of debt.  A typical payday loan must be paid back in full within two weeks, which is an unconventional and unreasonably short deadline for borrowers who are struggling financially. The short payback period of these loans also results in triple digit APRs, with most borrowers unable to pay them off for four months

“No one should be charged triple digit-interest rates on a loan that inevitably traps them deep in debt,” said Syed Ejaz, policy analyst for Consumer Reports.  “Federal law already protects active duty members of the military from predatory loans by limiting the interest rates lenders can charge them. This bill will ensure that everyone enjoys the same protection from sky-high interest rates and can access more affordable credit and avoid drowning in costly debt.”

See Consumer Reports’ letter to the Senate Banking Committee in support of  the Veterans and Consumers Fair Credit Act.

Michael McCauley, michael.mccauley@consumer.org or 415-902-9537