RICHMOND, Va.—At the same time legislators in Washington are proposing a 10% cap on credit card interest, the State of Virginia is now considering legislation designed to limit the interest charged on consumer credit.
The current language of SB 1252 sets an interest rate cap of 12%, Crowdfund Insider reported.
The bill states: “Except as otherwise permitted by law, no contract shall be made for the payment of interest on a loan at a rate that exceeds 12% per year.”
There are exceptions included in the legislation, including motor vehicle title lenders, short-term loans, and others, Crowdfund Insider noted.
The American Fintech Council (AFC) has distributed a statement asking Virginia governor Glenn Youngkin to veto the bill, Crowdfund Insider said. Analysts predict the bill would restrict fintech lending in Virginia.
“SB 1252 would cut off hundreds of thousands of Virginians from safe and responsible credit products, pushing them toward more costly and less regulated alternatives,” said Phil Goldfeder, CEO of the American Fintech Council. “Responsible fintech companies and innovative banks have worked collaboratively with regulators to expand financial access in Virginia, but this bill would undo that progress and harm consumers without providing any clear consumer protection benefits. We strongly urge Governor Youngkin to veto this bill to protect Virginia families and preserve competition in the state’s financial services market.”
Crowdfund Insider noted that Ian P. Moloney, SVP and head of policy and regulatory affairs at AFC, stated the legislation potentially “creates an unclear and legally questionable policy framework.”
“This bill lacks clarity on how responsible Fintech companies and their bank partners can operate in Virginia, leading to costly implementation challenges for Virginia’s banking regulator, potential legal disputes, and a waste of government resources and Virginia taxpayer dollars,” Moloney said. “Rather than creating uncertainty, policymakers should focus on clear and consistent regulations that ensure consumer protection while allowing responsible lenders to serve the market.”