NCUA published a letter to credit unions (24-FCU-02) announcing that the Board voted to continue the “temporary” 18 percent interest rate ceiling for loans made by federal credit unions.
Ordinarily, the interest rate cap is set at 15 percent as established by the Federal Credit Union Act, which also includes provisions allowing the Board to vote in a higher ceiling temporarily. This most recent extension was voted on by the Board at their July 18 meeting and will extend the 18-percent ceiling through March 10, 2026.
This should come as no surprise to credit unions though, as America’s Credit Unions reported that the NCUA has “kept the 18% cap in place since May 1987.” The last time the NCUA permanently raised the rate cap was in 1980, when it was moved from 12 to 15 percent, and temporarily raised to 21% in Dec 1980, until it was lowered again to 18% in 1987. Since then, NCUA boards have voted to maintain that ceiling at 18 percent 23 times, having to renew the measure every 18 months.
Per the NCUA, the decision also allows federal credit unions to continue to offer a higher rate payday alternative loan at up to 28 percent.
America’s Credit Unions meanwhile has called on the board to “adopt a floating interest rate ceiling to allow federal credit unions to “more fairly and fully serve their communities” through economic cycles.
