American Fintech Council (AFC) announces support for new legislation to create 36 percent interest rate cap on consumer loans
The American Fintech Council (AFC), the premier industry association representing responsible fintech companies and innovative banks who deliver critical access to safe and affordable financial services, has announced its support for the Protecting Consumers from Unreasonable Credit Rates Act of 2023. The legislation introduced by U.S. Senate Majority Whip Dick Durbin (D-IL) and co-sponsored by U.S. Senators Jeff Merkley (D-OR), Richard Blumenthal (D-CT), and Sheldon Whitehouse (D-RI), would cap fees and interest on consumer loans at an Annual Percentage Rate (APR) of 36 percent.
“Our members are creating access to safe, affordable and transparent credit options and demonstrate every day it is possible to offer affordable loans at 36% APR,” said Phil Goldfeder, Chief Executive Officer of the American Fintech Council. “We must create a clear standard for innovative consumer lenders providing access to transparent loan options, particularly in minority and rural communities left behind by legacy institutions. AFC members safely serve millions of Americans every day and we are proud to work with lawmakers to eliminate triple digit interest rates that put too many distressed families into debt traps.”
The recently introduced legislation aims to amend the Truth in Lending Act “to establish a national usury rate for consumer credit transactions” in order to close all loopholes necessary to eliminate predatory lending and promote small dollar loans with affordable repayment schedules by ensuring that no lender may make a loan with fees and interest in excess of 36%.
“Too many Americans suffer long-term financial harm from predatory loans and deceptive tactics. We need federal legislation that cracks down on predatory lending and closes loopholes used to exploit hard-working Americans,” said Senator Dick Durbin in a recent statement. “The Protecting Consumers from Unreasonable Credit Rates Act would eliminate high-cost payday loans and other costly forms of credit that trap vulnerable consumers in endless debt cycles.”
“We are pleased to again support legislation that codifies regulatory standards that our members voluntarily hold,” said Armen Meyer, Chair of AFC’s Board Public Policy Committee. “We know that access to credit can responsibly be provided below 36% APR because we have done it.”
AFC’s mission is to promote an innovative, transparent, inclusive, and customer-centric financial system by supporting the responsible growth of lending, fostering innovation in financial technology (Fintech), and encouraging sound public policy. AFC members are at the forefront of fostering competition in consumer finance and pioneering ways to better serve underserved consumer segments and geographies. AFC has publicly supported and helped pass 36% rate caps in several states, which is a key component of our advocacy to promote responsible lending. Our members are also lowering the cost of financial transactions, allowing them to help meet demand for high-quality, affordable financial products.
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