Senate Bill Would Cap Consumer Interest Rates At 36%

A new Democratic Senate bill—the Predatory Lending Elimination Act—has been introduced to impose a nationwide 36% APR cap (including fees) on most forms of consumer credit, effectively extending the Military Lending Act standard to all consumers.

What the bill does

• Sets a permanent 36% APR ceiling on “consumer credit,” defined broadly to include credit cards, payday loans, auto‑title loans, and most installment loans, with fees counted in the APR calculation.

• Extends the 36% cap that currently applies only to active‑duty servicemembers under the Military Lending Act to everyone, nationwide.

• Targets triple‑digit APR products and “rent‑a‑bank” arrangements by applying the cap to all lenders, including banks, and by closing loopholes and junk‑fee structures.

Coverage and exclusions

• Covered products: credit cards, payday loans, auto‑title loans, and other non‑mortgage, non‑auto‑purchase consumer credit, with all finance charges and many fees included in the APR cap.

• Excluded products: residential mortgages, car purchase loans, and loans from federal credit unions (which are already subject to an 18% general cap and 28% for payday alternative loans under existing law).​

• The bill preserves state authority to impose stricter limits, including lower rate caps or more protective rules for larger‑dollar loans.

Political and advocacy context

• The bill is led by Sen. Jack Reed (D‑RI) and was introduced with a group of Democratic co‑sponsors; over 170 consumer, civil‑rights, faith, and labor organizations have endorsed it.

• It fits into a broader push in the 119th Congress to constrain high‑cost credit, alongside proposals like the Sanders–Hawley 10% Credit Card Interest Rate Cap Act and renewed Durbin/Merkley 36%‑cap bills.

• Industry groups are already framing 36% caps as harmful to credit availability, echoing past opposition to similar Durbin/Merkley proposals in prior Congresses.

Practical implications if enacted

• High‑cost small‑dollar products (payday, auto‑title, many non‑bank installment loans) would be effectively eliminated or radically repriced in states that currently allow triple‑digit APRs.

• Card issuers and other mainstream lenders would need to ensure all-in pricing (interest plus fees) stays under 36% APR for covered products, which could constrain penalty rates and certain fee structures for subprime segments.

• States could still maintain or adopt lower caps, but could no longer authorize loans above 36% APR, closing today’s fragmentation between permissive and restrictive states.

If you want, I can pull the current bill text (S. 3793 or its latest number) and map its operative provisions against MLA, TILA, and existing state small‑dollar frameworks.