American Banker, March 1, 2022, More states look to cap consumer interest rates at 36%
Lawmakers in New Mexico recently approved a 36% rate cap, which would slash the state’s current maximum APR from 175%. It now awaits the governor’s signature. Legislators in Rhode Island and Minnesota are considering similar restrictions, and consumer advocates in Michigan are gathering signatures for a ballot initiative on the same issue.
The state-level action comes as congressional efforts to institute a national APR cap of 36% remain stuck. The federal legislation, championed by Democratic lawmakers, is similar to the limit Congress put in place for military members in 2006, though it would apply to all borrowers.
But advocates are also working at the state level to cap interest rates at 36% — or lower. Doing so would help prevent borrowers from being “caught in the payday debt trap,” where they are unable to repay triple-digit APRs and end up owing far more in interest than they originally borrowed, Farahi said.
