Bill > S2781

This bill establishes a national maximum interest rate of 36% for consumer credit transactions by amending the Truth in Lending Act, with the goal of protecting consumers from predatory lending practices. The legislation defines the interest rate comprehensively, including not just traditional interest but also fees such as credit insurance premiums, application fees, late fees, overdraft charges, and fees associated with alternative lending products like wage advance services. The bill allows for some minor tolerances, such as small application fees (up to $30 or 5% of credit limit) and modest late payment fees. Creditors who violate the rate cap could face significant penalties, including up to one year in prison and fines of either three times the accrued debt or $50,000. The legislation is informed by findings that consumers have paid billions in high-cost loan fees, with some loan types carrying effective annual interest rates as high as 17,000%. Importantly, the bill does not preempt state laws that provide greater consumer protections and allows state attorneys general to bring enforcement actions. The bill also requires clear disclosure of the "FAIR" (Fee and Interest Rate) on credit agreements, making the true cost of borrowing more transparent to consumers.

Housing and Urban Affairs

https://www.congress.gov/bill/119th-congress/senate-bill/2781/all-info