A Retread Partisan Rate Cap Bill
Sen. Jack Reed (D-RI) reintroduced legislation to impose a national 36% “all in” rate cap on consumer loans. Small dollar loans, credit cards, and other forms of short-term credit are crucial in helping consumers from all economic backgrounds meet everyday needs, whether for planned or unexpected emergency expenses.
The proposed 36% APR nationwide rate cap would make it more difficult for many consumers to obtain credit and harm the very consumers the legislation seeks to protect. AFSA believes Congress should reject proposals restricting consumer credit options and look for ways to expand access to safe and affordable credit.
Most recently, the Federal Reserve Bank of New York confirmed rate caps do not work and published a report focusing on three states (South Dakota, North Dakota, and Illinois) that implemented 36 percent all-in rate caps on many types of non-bank consumer loans between 2016 and 2022. One of the key conclusions of this research is that “…lending to the riskiest cohort of borrowers decreased sharply under usury limits. These borrowers were unable to find lower cost loans from banks and credit unions, as proponents of rate caps may have expected [emphasis added]. Nor does delinquency risk for this cohort improve, implying the rate caps reduced credit access but not credit stress.”
This legislation has historically been opposed by AFSA and many other financial organizations. AFSA will keep you updated if this is legislation does advance.
February 6th, 2026
Recent Posts
- AFSA Webinar | Rethinking Auto Recoveries: The Role of Secured Debt Sales in Today’s Market
- AFSA Testifies at IRS Public Hearing on Vehicle Finance Interest Tax Deduction
- AFSA Submits Comment on CFPB Complaint Database Issues
- AFSA to Congress: Close Debt Settlement Loopholes
- AFSA Webinar | Trust, but Verify: Why Title & Lien Validation is the Missing Link in Lender Fraud Prevention