Bill Would Cap Payday Loan Interest

Rep. Sam Graves, R-Mo., has sponsored HR-97, which would slap a 36 percent cap on the annual percentage rate that lenders can charge for loans to service members and their spouses. The legislation is designed to stop “payday” loans which currently can hit the borrower with interest rates as high as 400 percent. Furthermore, some borrowers who fall behind in payments reportedly have incurred penalty rates as high as 1,300 percent. The House earlier had passed a military financial protection bill requiring short-term lenders to notify military borrowers in writing of the dangers of borrowing money to pay off other loans and to advise them of alternatives. That bill, however, did not cap the interest rate. Graves’ bill has 36 co-sponsors.