Skip to main content

NCUA Board Votes to Maintain 18% Interest Rate Ceiling on Most Loans

By Ronald K. Vaske, Kaley Schafer & Loran Kilson on

The NCUA board on July 18 voted to maintain its interest rate ceiling on most loans at 18% from Sept. 11, 2024 through March 10, 2026.

The only exception to that rate cap is loans modeled after the agency’s Payday Alternative Loan program; the interest rate on those loans will remain capped at 28%.

“Lowering the rate ceiling below the current temporary 18% maximum would threaten the safety and soundness of individual credit unions due to the anticipated adverse effect upon liquidity, capital, earnings, and growth,” agency staff told the board, in a memo.

The Federal Credit Union Act limits the interest rate that credit unions may charge on loans to 15%. However, that cap may be set higher if the NCUA consults with Congress, the Treasury Department and the appropriate congressional committees. The law sets two other conditions that must be met before the interest rate may be increased: money market interest rates must have risen over the preceding six-month period and the prevailing interest rate levels must threaten the safety and soundness of individual credit unions as evidenced by adverse trends in liquidity, capital, earnings, and growth.

“In the current rate environment, an 18-percent interest rate ceiling provides federal credit unions with sufficient ability to manage liquidity, capital, earnings, and growth, protects member access to safe and affordable credit, and does not require federal credit unions to incur any additional workload or costs associated with a change to the rate ceiling,” the agency staff said, in the memo.

The NCUA board last voted to set the ceiling at 18% effective from March 11, 2023, to September 10, 2024. In December, 1980, the NCUA board voted to increase the loan interest rate ceiling to 21%. In May, 1987, the board reduced the cap to 18% and has voted 23 times to maintain that cap.

This development is not only important to federal credit unions, but it is also important to state-chartered credit unions, banks and other lenders whose states contain statutes giving those entities usury parity with federal credit unions 

Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

Bipartisan Bill Would Expand Federal Credit Union Investment Authority

WASHINGTON—Reps. Janelle Bynum (D-OR) and Young Kim (R-CA) introduced bipartisan legislation Thursday that would significantly broaden the investments available to federal credit unions, including giving them new authority to invest in corporate debt and asset-backed securities. Young Kim The Credit Union Investment Authority Act would amend the Federal Credit Union Act to expand federal credit unions’ investment authority. Under the bill, federal credit unions could invest in marketable debt obligations issued by companies and other organizations that are not limited to serving credit unions. The legislation would cap a credit union’s investment in the obligations of any single issuer at 10% of its paid-in unimpaired capital and surplus. The measure would also expressly authorize investments in asset-backed securities as defined under the Securities Exchange Act of 1934. Kathleen Coulombe The bill would require the NCUA board to issue implementing regulations within one year of enactm...
Post a Comment
Read Complete Article HERE>»

Liquidity Resources

Liquidity Resources Liquidity is a credit union’s capacity to meet its cash and collateral obligations at a reasonable cost. Adequate liquidity is necessary to efficiently meet both expected and unexpected cash flows and collateral needs without compromising the credit union’s daily operations or financial condition. Effective credit union management identifies, measures, monitors, and controls exposure to liquidity risk. Primary Risks In managing expected cash flows, a credit union may experience situations that increase its liquidity risk. These situations include mismatches between sources and uses of funds, market constraints on the ability to convert assets into cash or to access sources of funds (market liquidity), and contingent liquidity events. Changes in economic conditions or exposure to credit, market, operational, legal, and also can affect an institution’s liquidity risk profile. None of these risks are mutually exclusive, and interrelated risks may contribute to increase...
Post a Comment
Read Complete Article HERE>»

Just What Is Our Gross Domestic Product

    A core measure of a nation's total economic activity, gross domestic product represents the value of all final goods and services produced within a country's borders in a given year. Economists can calculate a country's aggregate economic activity by adding together its total consumer spending, business investment, government spending, and net exports. As of June 2026, the US' inflation-adjusted GDP was about $24.2T. > The three different ways to calculate GDP. ( More ) > How "nominal" GDP differs from "real" GDP. ( More ) Since the concept was popularized by Nobel laureate Simon Kuznets in the 1930s, GDP has become one of the most important economic indicators in both domest...
Post a Comment
Read Complete Article HERE>»

Senate, 51-47, has confirmed John Crews to the NCUA board

WASHINGTON—The U.S. Senate, 51-47, has confirmed John Crews to the NCUA board, clearing the way for him to succeed Kyle Hauptman and return the agency to a single-member board following the Trump Administration's removal of Democratic board members Todd Harper and Tanya Otsuka earlier this year. Maintaining the foundational stability of the credit union system Supporting efficient, risk-based regulation that accounts for institutional size and operational differences Preparing for technological advancement while safeguarding member assets Encouraging the growth of new credit unions to serve underbanked and military communities Preserving an open, accessible, and collaborative dialogue between the NCUA and the credit union movement Crews, who most recently served in the Treasury Department, has said his priorities include reducing regulatory burden for smaller credit unions, encouraging innovation and supporting the chartering of new credit unions, while maintaining the safety and s...
Post a Comment
Read Complete Article HERE>»

Dolphin Debit, Enters into Partnership With CUSI

 HOUSTON–  Dolphin Debit , a full-service ATM management company, said it has entered into a strategic partnership with Credit Union Services, Inc. (CUSI), the Service Corporation of the MD|DC Credit Union Association. “Through the strategic partnership, CUSI adds a budget-ready, industry-leading ATM management program to its portfolio of solutions for credit unions in the Maryland and D.C. region,” Dolphin Debit said. According to Dolphin Debit, its ATM outsourcing service includes purchase and deployment of new ATMs, purchase of the financial institution’s existing ATMs, terminal driving, transaction processing, ATM maintenance, armored car service, communications, monitoring and dispatch, and cash management. “We welcome this oppor...
Post a Comment
Read Complete Article HERE>»

Sunday Reading - Near-death experiences, 101

  Scrapes with Death   Near-death experiences, 101 A near-death experience usually occurs in the wake of a traumatic physical event or a reversible clinical death, such as when someone is  revived after a heart attack . While the experience varies, NDEs commonly feature a feeling of detachment from the body, visions of bright lights, a warped sense of time, or religious experiences. Records of NDEs go back to the ancient Greeks and are found across cultures all over the world. The first known clinical observation was recorded  in 18th-century France . In the 1970s, psychiatrist Raymond Moody pioneered the academic study of NDEs as medical events after an acquaintance relayed his own near-death experience. Roughly  5% of the population  is estimated to have a memory of an NDE, with common reports of a feeling of peacefulness (80%), followed by bright lights (69%) and encountering other people or spirits (64%). ... Read our full  explainer on NDEs here ....
Post a Comment
Read Complete Article HERE>»

CFPB Issues Final Rule on Remittance Transfers; Proposes Changes As Well

On January 20, 2012, the CFPB adopted a final rule amending Regulation E (Electronic Fund Transfers) to include consumer protections for various types of remittance transfers. The rule was originally proposed by the Federal Reserve Board last May; however, authority to finalize the rule-making transferred to the CFPB on July 21, 2011  ****More At;  CFPB Issues Final Rule on Remittance Transfers; Proposes Changes As Well : Written by Bernadette Clair, Regulatory Compliance Counsel   
Post a Comment
Read Complete Article HERE>»

A Review Of Firefighter vs All Credit Unions Investment Trends At Year-End 2013

This chart shows all Firefighter Credit Unions vs National yield. If you would like to see how your credit union rated  Click HERE As of Dec. 31, 2013, credit unions in the United States held more than $362 billion in investments.  It’s not only total investments that are shrinking, however. For the past year, investment growth has slowed and the -1.77% growth rate posted at year-end 2013 marks the first time since fourth quarter 2006 the rate has dipped into negative territory. Despite this trend, the investment portfolio still comprises a significant portion, 35%, of the industry’s total asset composition. Read More A Review Of Credit Union Investment Trends At Year-End 2013 - General Features - News | Credit Unions
Post a Comment
Read Complete Article HERE>»

Steven Rick, Senior Economist for CUNA will Be At NCOFCU's 2014 San Diego Conference

We are please to have Steve Rick Senior Economist from CUNA back with us this year. Steven Rick is the Senior Economist for CUNA & Affiliate’s Economics & Statistics Department. Steve has been with CUNA since January, 1992. He conducts economic research, teaches and lectures at various credit union schools and conferences across the country and internationally and writes articles for CUNA publications. Steve facilitates strategic planning sessions for credit union board of directors. He has authored a textbook on asset-liability management for credit union executives. Steve also holds a Lecturer position at the University of Wisconsin where he teaches various courses. Mr. Rick has a B.A. in Economics from Moorhead State University; a B.S. in Finance from Moorhead University; and a M.S. in Economics from the University of Wisconsin, Madison. He is also a Ph.D. candidate for a doctoral degree in Economics at the University of Wisconsin, Madison. Mr. Rick has nine years teac...
Post a Comment
Read Complete Article HERE>»