Statement on the Latest National Interest Rate Cap Proposal

December 14, 2023, Washington, D.C. – INFiN, a Financial Services Alliance, issued the following statement addressing Sen. Jack Reed’s (D-RI) latest proposal (S. 3549) to implement a national Annual Percentage Rate (APR) cap on consumer credit, including small-dollar loans:

“With the reintroduction of fatally flawed, ill-informed national interest rate cap legislation, the sponsors and supporters’ intentions remain clearer than ever: to deny hardworking consumers the ability to access regulated credit options they need, trust, and value.

“This rate cap proposal once again relies not just on a fundamental misunderstanding of today’s consumer credit marketplace but a willful disregard for the very real financial challenges many borrowers face and the informed decisions they make. Arbitrary policies such as interest rate caps, born out of bias not data, have proven time and again to result in the closure of licensed, regulated consumer lenders responsible for providing critical credit to borrowers overlooked, underserved, or left behind by more traditional institutions. Rate caps only serve to expose and endanger consumers in need of credit to the costs and consequences associated with riskier, less regulated alternatives, or to no alternatives at all.

“Borrowers consistently voice overwhelming satisfaction with regulated short-term, small-dollar loans, finding them cost-competitive, transparent, and effective. Members of Congress would do well to listen to consumers, instead pursuing policies that secure a diverse, competitive, and fairly regulated market that enables and empowers choice rather than eliminates it.”