WASHINGTON--The Defense Credit Union Council is asking NCUA to extend the current temporary 18% interest rate ceiling for federal credit union loans beyond its scheduled expiration on March 10, 2026.
In a letter addressed to NCUA Chairman Kyle Hauptman and the NCUA board, DCUC Chief Advocacy Officer Jason Stverak voiced that maintaining the 18% cap is critical to preserving credit union safety and soundness while ensuring continued access to affordable credit for members, especially those of modest means or limited credit histories.
“Allowing the loan interest rate ceiling to revert to the statutory 15% would significantly restrict credit availability and undermine the ability of credit unions to serve higher-risk and underserved borrowers,” said Stverak. “The NCUA board’s long-standing use of its statutory authority to maintain the 18% cap has proven both prudent and necessary, especially under current economic conditions.”
The 18% interest rate ceiling has been continuously in place since May 1987 and has been renewed 23 times by successive NCUA boards. Most recently, in July 2024, the board unanimously voted to extend the cap through March 10, 2026, recognizing that prevailing interest rate and funding conditions warranted flexibility beyond the 15% statutory baseline.
“Credit unions are not using the 18% ceiling to overcharge consumers,” Stverak added. “Average loan rates remain well below that level for most borrowers. The cap simply allows credit unions to responsibly price higher-risk loans so members who need credit the most are not shut out entirely.”
DCUC also highlighted the importance of preserving the effectiveness of the NCUA’s Payday Alternative Loan (PAL) program. Because PAL pricing is directly tied to the general interest rate ceiling, allowing the cap to fall to 15% would reduce the maximum allowable PAL rate and weaken one of the most successful tools credit unions have to combat predatory payday lending, the trade group stated.
“Lowering the cap would risk pushing vulnerable borrowers toward far more expensive and less regulated lenders,” Stverak said. “That outcome runs counter to the credit union mission of financial inclusion and the NCUA’s own policy objectives.”