ALEXANDRIA, Va. -- Despite the large regulatory proposal on the table, it was not the only item on the NCUA's January board meeting agenda.
Every 18 months, by statute, NCUA has to consider the limit on interest that federal credit unions can charge on loans above the statutorily mandated 15%, and has pegged the rate over the last few years at 18%. The NCUA Board voted to continue at that level.
The credit union interest rate increase will be in place from March 2008 to September 2009.
Interestingly, the board's discussion around increasing the cap included the possibility of raising it further and whether doing so would help more credit unions offer loans to members whose credit standing might preclude them being offered loans at 18%. Board member Gigi Hyland in particular asked if raising the rate would not help CU products--which are meant to compete with higher cost payday loans--save greater numbers of lower income members from typical payday lending rates.