Support the Interest Rate Reduction Act and Stop Lenders from Imposing Excessive Interest Rates

Senate bill S. 582,  dubbed The Interest Rate Reduction Act, was proposed and introduced to the Senate by Senator Bernie Sanders of Vermont. A companion bill, H.R. 1640 was also introduced in the House by Maurice Hinchey of New York. The Interest Rate Reduction Act would extend interest rate caps -that currently protect federal credit union members from excessive "loan shark" interest rates. The bill would also block lenders from imposing excessive fees to avoid  rate caps.

The bill mirrors the usury cap established by the Federal Credit Union Act and applies it to all forms of credit.  That cap is 15% by statute, but the National Credit Union Administration has exercised its authority to raise it to 18% APR, where it has been for many years.

According to the Center for Responsible Lending, payday loans carry an annual interest rate of 391 percent and are so difficult to pay off that many borrowers end up paying more in interest than they originally borrowed. The average borrower pays back $800 for a $300 loan, a loss of $500 that goes purely toward interest. Twelve million Americans are caught in the trap every year.


Support the Interest Rate Reduction Act by sending a letter directly to your legislators here.

See a letter of support for this bill from AFFIL and their partners (PDF)
here's a small portion of it;

"... Banks routinely induce consumers to incur thousands of dollars of credit card debt, then double or triple their interest rates to unaffordable levels once the consumer is on the hook. Other lenders also charge unreasonable interest rates, including some auto loans, installment loans to our military service members, tax refund anticipation loans, and payday loans at triple digit interest rates.

These trends are only exacerbated by the current financial crisis. As bank losses mount, they are attempting to compensate by notifying millions of customers of interest rate hikes. Other families who cannot find affordable credit are increasingly turning to legalized loan sharking by payday and other predatory lenders. MORE

What else can you do to avoid unfair "big" bank fees and interest rate spikes?

Many people have been turning towards credit unions in order to avoid excessively high interest rates  currently being imposed by most big banks. Learn about American Debt Relief Challenge and how you can save money by turning towards your nearest credit union by reading this earlier blog; Stick it to the Credit Card Companies. Here's How!