The Defense Credit Union Council (DCUC) has formally asked the NCUA to extend the current 18% interest rate ceiling on federal credit union loans beyond its scheduled expiration on March 10, arguing that the higher cap remains essential to safety and soundness and member access to credit.
In a letter sent to NCUA Chairman Kyle Hauptman, DCUC Chief Advocacy Officer Jason Stverak said allowing the ceiling to revert to the statutory 15% limit would significantly constrain credit availability, particularly for higher-risk and underserved borrowers. The group said credit unions rely on the 18% cap to responsibly price loans for members with limited or impaired credit histories without excluding them from access altogether.
The 18% ceiling has been continuously in place since May 1987 and has been renewed 23 times by successive NCUA boards. Most recently, the board voted unanimously in July 2024 to extend the cap through March 10, 2026, citing prevailing interest rate and funding conditions.
DCUC's letter emphasized that average credit union loan rates remain well below 18% for most borrowers, characterizing the cap as a tool for risk-based pricing, not consumer overcharging. The group also highlighted the connection between the general rate ceiling and the NCUA's Payday Alternative Loan program, noting that a reduction to 15% would lower allowable PAL rates and weaken a key alternative to high-cost payday lending.
According to DCUC, lowering the cap could push vulnerable borrowers toward less regulated and more expensive lenders, undermining the credit union mission of financial inclusion. The group urged the NCUA Board to act promptly to extend the 18% ceiling, reaffirming a policy it said has supported credit union stability and member access to affordable credit for nearly four decades.
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