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WASHINGTON, D.C. – United States Senator Dick Durbin (D-IL) introduced the Protecting Consumers from Unreasonable Credit Rates Act - a bill to eliminate the excessive rates that some consumers are charged for payday loans, car title loans and other types of credit.

“Within blocks of my home in Springfield, Illinois, there are payday lenders charging interest rates of two and three hundred percent of the value of the loan,” Durbin said. “These excessive rates are often hidden and can have crippling effects on those individuals who can afford it least. Congress must enact protections against predatory lending. America’s working families depend on it.”

Durbin’s bill would establish a federal usury cap of 36% APR on all consumer credit transactions. That rate is similar to usury caps already enacted in many states and is the same as the cap already in place for military personnel and their families. While 36% may sound high, many loans have hidden fees and variable rates that dramatically add costs.

The Chicago Tribune recently reported the story of 66 year-old Rosa Mobley, who lives on Social Security and a small pension. Ms. Mobley took out a car title loan of $1,000 and was charged 300% interest. She wound up paying more than $4,000 over 28 months and is struggling to get by. Under Durbin’s legislation, the most Ms. Mobley would have paid was $60, in interest, per month or $1,680 for 28 months.

Efforts to address the exorbitant interest rates charged on many payday loans have often failed because of the difficulty in defining predatory lending. Durbin’s bill seeks to overcome this problem by setting a relatively high interest rate as the cap and applying that cap to all credit transactions.

Specifically, the bill:

• Establishes a maximum interest rate of 36% on all consumer credit transactions, taking into account all interest, fees, defaults, and other finance charges.

• Clarifies that this cap does not preempt any stricter state laws.

• Applies civil penalties for violations including nullification of excess charges, fines, and prison.

• Empowers attorneys general to take action for up to three years after a violation.

This is the most recent in a series of bills Durbin has introduced to help America’s working families cope with increased economic hardship. In the last seven years, Americans have seen their average wages decrease while the costs of food, health care, gas and mortgages have skyrocketed. As a result, many American families are falling far into debt and are struggling financially.

Other bills aimed at lessening the burden on American families which Durbin has introduced include:the Helping Families Save Their Home in Bankruptcy Act – to help homeowners facing foreclosure; the Increasing Transparency and Accountability in Oil Prices Act – to curb the effects speculation in the oil markets plays on the cost of gasoline; the Small Business Health Options Program (SHOP) – making health insurance more affordable, predictable, and accessible for small businesses and the self-employed; and the National Guard and Reservist Debt Relief Act - to aid National Guard and Reserve members who are struggling financially receive bankruptcy assistance upon returning from an overseas deployment.

Source : http://originatortimes.com