ALEXANDRIA, Va. — The NCUA Board today renewed the 18% cap onloans made by federally chartered credit unions. Under the FederalCredit Union Act, the NCUA board may raise the statutorily mandated15% ceiling on federal credit union interest if money marketinterest rates have increased in the previous six months and ifprevailing interest rate levels threaten the safety and soundnessof federal credit unions.
|The credit union interest rate increase would be in place fromMarch 2008 to September 2009.
|Interestingly, discussion on the board around increasing the capincluded discussion of the possibility of raising it further andwhether doing so would help more credit unions offer loans tomembers whose credit standing might preclude them being offeredloans at 18%. Board member Gigi Hyland, in particular, asked ifraising the rate would not make CU's products, which are meant tocompete with higher cost payday loans, save greater numbers oflower income members from the higher payday lending rates.
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