| 2/7/2013 |
Pichardo resubmits bill to protect consumers from 260 percent APR interest rates
STATE HOUSE – Sen. Juan M. Pichardo (D – Dist. 2, Providence) has submitted his consumer protection bill to again attempt to limit the amount of interest a payday lender can charge to a reasonable level.
“I think we can all agree that a 260 percent APR is excessive by any standard,” Senator Pichardo said. “Rhode Island is the only state in New England that currently allows payday lending. This bill would bring payday lenders into alignment with Rhode Island’s usury law by implementing a 36 percent rate cap.”
Arguments for allowing such high interest rates include the position that limiting the amount of interest payday lenders can charge will restrict access to capital. Opponents of lowering the maximum rate have argued that these are risky loans with high default rates, and without charging these rates, payday lenders would not be able to provide access to cash for many who need it, but are unable to obtain it elsewhere.
However, Senator Pichardo noted that reports have shown these exorbitant interest rates and lending practices simply trap borrowers in a vicious cycle of debt. He further pointed out that the issue has received attention of the United States military, which asked Congress to enact legislation restricting payday lending interest rates to any member of the armed forces to 36 percent. The federal law has been in place since 2007. Rhode Island laws currently allow payday lenders a maximum interest rate that is seven times greater than what the military allows lenders to charge their active members.
“Our military recognized that there was problem and took action to protect our soldiers from the excessive interest rates of payday lending,” said Senator Pichardo, who served 22 years in the Rhode Island Air National Guard. “We should take similar action here in Rhode Island to protect our residents from these excessive interest rates. I am optimistic that this year we can build consensus around this issue. More senators have signed on to this bill than last year.”
This year, 29 of the 38 Senators have signed on as cosponsors. Rep. Frank G. Ferri (D – Dist. 22, Warwick) sponsors the House bill, which has been referred to the House Finance Committee. Cosponsors of the House bill include House Minority Leader Brian C. Newberry (R-Dist. 48, North Smithfield, Burrillville), Rep. Joseph S. Almeida (D-Dist. 12, Providence), Rep. Christopher R. Blazejewski (D-Dist. 2, Providence) and Rep. Teresa A. Tanzi (D-Dist. 34, South Kingstown, Narragansett.)
For more information, contact:
Brenna McCabe, Publicist
State House Room 20
Providence, RI 02903
(401) 222-2457 |
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