ALEXANDRIA, Va. — The NCUA Board today renewed the 18% cap on loans made by federally chartered credit unions. Under the Federal Credit Union Act, the NCUA board may raise the statutorily mandated 15% ceiling on federal credit union interest if money market interest rates have increased in the previous six months and if prevailing interest rate levels threaten the safety and soundness of federal credit unions.

The credit union interest rate increase would be in place from March 2008 to September 2009.

Interestingly, discussion on the board around increasing the cap included discussion of 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 make CU's products, which are meant to compete with higher cost payday loans, save greater numbers of lower income members from the higher payday lending rates.