Members of Congress in the House and Senate recently introduced versions of the “Veterans and Consumers Fair Credit Act,” designed to extend to all consumers the interest rate caps currently in place for active-duty service members and dependents. This proposed legislation is modeled after the 2015 update to the 2007 Military Lending Act (MLA), and mandates a nationwide 36 percent interest rate cap on consumer credit.
Small-dollar credit products serve millions of people. According to the FDIC, nearly 33 million families have no or only limited access to bank credit. A recent study by the Federal Reserve Bank of New York suggests millions more may be “credit insecure.” That is, they tend to max out their credit limit, have a low credit score, and have a history of late payments. Also, 45 million primarily young, low-income, and minority Americans have poor or thin credit histories. They are ineligible for prime credit cards and bank loans.
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