WASHINGTON—With rumors circulating in Washington overnight that a 10% credit card interest rate cap could be offered Thursday as an amendment during the House Financial Services Committee’s full markup, the Defense Credit Union Council sent a letter to the Committee urging lawmakers to reject any such proposal.
“While we understand the well-intentioned goal of protecting consumers, we firmly believe that a blanket 10% cap on interest rates would do far more harm than good for the military and veteran communities we serve,” wrote DCUC Chief Advocacy Officer Jason Stverak. “Such a proposal threatens to undermine access to credit for servicemembers and their families, weaken military financial readiness, and needlessly penalize the very credit unions that have a proven track record of responsible lending and compliance with consumer protection laws.”
Stverak pointed out credit unions already operate under interest rate limits far stricter than those applicable to most banks and lenders, reflecting our mission to put people over profits.
“Federal law imposes a statutory interest-rate cap (currently 18% for most loans, with limited exceptions) on federal credit unions – a cap that has existed for decades and ensures credit unions do not charge exorbitant rates,” wrote Stverak. “In addition, defense credit unions fully comply with the Military Lending Act (MLA), which caps annual interest on loans to active-duty servicemembers at 36%. In practice, our member-owned, not-for-profit credit unions consistently offer loans well below predatory rates, reinvesting earnings to benefit our communities rather than maximizing shareholder returns. Given these safeguards already in place, an extreme 10% nationwide cap is unnecessary – and would, in fact, be counterproductive.”
Stverak concluded by urging the Committee to reject any amendment imposing a 10% interest rate cap during its markup Thursday.
“Such a blanket cap, while well-intended, would ultimately harm the military and veteran communities by limiting access to responsible credit, reducing financial options, and possibly driving servicemembers toward predatory alternatives – outcomes entirely at odds with the goal of protecting our troops and their families,” he stated.
As CUToday.info reported, DCUC early Wednesday also sent a letter to the HFSC expressing concern that no credit union-specific legislation has been included on the Committee’s markup agenda, despite repeated advocacy highlighting long-standing priorities critical to financial access and readiness for communities nationwide.