What's happening
This bill caps credit card interest rates at 15% in New York State, with certain exceptions and penalties for violations.
Why it matters
Significantly reduces the cost of borrowing for consumers. by capping most credit card interest rates at 15%, which could save New Yorkers hundreds or thousands in interest payments and reduce debt burdens, especially for those who carry balances.
Closes loopholes on extra fees. by preventing lenders from bypassing the interest cap through non-interest fees, and limits the total of such fees to the amount of finance charges, ensuring overall borrowing costs are contained.
Empowers the state to respond to changing economic conditions. by allowing the Superintendent of Financial Services to temporarily raise the cap if money market rates spike and lenders’ financial stability is at risk, balancing consumer protection with financial system health.
Creates strong enforcement and consumer recovery mechanisms. by making violators forfeit all interest on illegal loans and allowing borrowers to sue for a full refund of excessive interest or fees within two years, thus providing real consequences for non-compliance and avenues for consumer redress.
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Who cares
Borrowers
The bill would generally cap annual percentage rates at 15%, including finance charges, and let borrowers sue within two years of the last excessive collection to recover interest, finance charges or fees paid.
Credit card issuers and other lenders
The bill would limit interest and fees, prohibit using non-finance-charge fees to evade the cap, and require forfeiture of all interest for knowingly charging excessive rates or fees.
Credit unions
The bill would exempt their extensions of credit from the 15% rate limit.
Department of Financial Services
The superintendent could authorize higher maximum rates for periods of up to 18 months upon findings of rising money market rates and threats to lenders’ safety and soundness.
Headline styles
Cap Credit Card Interest Rates
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to consumer protection
- Referred to consumer protection
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Cap Credit Card Interest Rates
In Assembly Committee · Consumer Affairs And Protection · Sponsor Al Taylor
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5880
2019-2020 Regular Sessions
IN SENATE
May 16, 2019
Introduced by Sen. SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to establishing the New York state loan shark act
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Short title. This act shall be known and may be cited as the "New York state loan shark act".
§ 2. The general business law is amended by adding a new section 517-a to read as follows:
§ 517-a. Maximum credit card interest rates. 1. For the purposes of this section "annual percentage rate of interest" or "annual percentage rate" shall mean the annual percentage rate for a loan of credit calculated according to the provisions of the Federal Truth in Lending Act (15 U.S.C. § 1601, et seq.) and the regulations promulgated thereunder by the federal reserve board, as said act and regulations are amended from time to time.
2. Notwithstanding any other provision of law, but except as provided in subdivision four of this section, the annual percentage rate applicable to any extension of credit shall not exceed fifteen percent on unpaid balances, inclusive of all finance charges.
3. Any fees that are not considered finance charges under section one hundred six of the Federal Truth in Lending Act (15 U.S.C. § 1605) may not be used to evade the limitations of subdivision two of this section, and the total sum of such fees may not exceed the total amount of finance charges assessed.
4. (a) The superintendent of financial services may establish a maximum annual percentage rate of interest exceeding the fifteen percent annual rate under subdivision two of this section for periods which shall not exceed eighteen months, upon a determination that:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11766-01-9
S. 5880 2
(i) money market interest rates have risen over the preceding six month period; and
(ii) prevailing interest rate levels threaten the safety and soundness of individual lenders, as evidenced by adverse trends in liquidity, capital, earnings, and growth.
(b) The limitation in subdivision two of this section shall not apply with respect to any extension of credit by a credit union, as defined by section two of the banking law.
5. (a) Knowingly taking, receiving, reserving, or charging of an annual percentage rate or fee greater than that permitted by subdivision two of this section shall be deemed a violation of this section, and the creditor shall be subject to a forfeiture of the entire interest which the note, bill, or other evidence of such obligation carries with it, or which has been agreed to be paid thereon.
(b) If an annual percentage rate or fee greater than that permitted under subdivision two of this section has been paid, the person by whom it has been paid, or the legal representative of such person, may, by bringing an action not later than two years after the date on which the usurious collection was last made, recover back from the lender in an action of debt, the entire amount of interest, finance charges, or fees paid.
6. Any creditor who violates this section shall be subject to the provisions of section five hundred thirteen of this article.
§ 3. This act shall take effect on the ninetieth day after it shall have become a law; provided that the provisions of this act shall apply to contracts entered into, altered, modified, extended, or renewed on or after such effective date. Effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed by the superintendent of financial services on or before such effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to establishing the New York state loan shark act
Purpose
This bill sets a state usury rate of 15 on credit cards and consumer loans.
Summary of provisions
§ 1. Provides that the title of the act shall he the "New York. state loan shark act."
§ 2. Creates section 517-a of the general business law to define "annual percentage rate of interest" or "annual percentage rate" and to cap the "annual percentage rate of interest" or "annual percentage rate" at 15.
The superintendent of financial services may allow lenders to charge higher rates if the superintendent determines that money market interest rates have risen over the preceding six month period and the 15 usury cap threatens the safety and soundness of individual lenders as shown by adverse trends in liquidity, capital, earnings, and growth. Interest rates can only be raised over 1St for a max of 18 months.
A lender who violates this section forfeits the entire interest due.
§ 3. This act shall take effect on the 19 day after it becomes law and will apply to contracts entered, altered, modified, extended, or renewed on or after the effective date.
Justification
New Yorkers have high levels of consumer debt in the form of mortgages, student loans and credit card balances. Financial institutions are allowed to charge high interest rates and fees on these loans to the detriment of working people.
In 2017, New York ranked fourth nationwide in credit card debt at $58.2 billion according to a report released by State Comptroller Thomas DiNa- poll. New York had the seventh highest per capita credit card balance of all states in 2017, at $3, 719, almost 20G higher than the national average of $3,100 per capita. 8.3 of credit card debt in New York was delinquent by 90 days or more, higher than the national overage of 7.5.
The Brom:, Utica-Rome, Watertown-Fort Drum, and Queens each had average balances that were lower than the State and national averages but their delinquency rates all exceeded these averages. Meanwhile, credit card companies generated over $178 billion in interest and fees.
Average Balance Percent 90+ Days Late
Bronx $4,600 15.1 Utica-Rome $4,800 8.6 Watertown-Fort Drum $4,900 8.4 Queens $5,200 9.2 New York state $5,800 8.2 National $5,400 8.3
Legislative history
New bill
Fiscal implications
None
Effective date
This act shall take effect on the 19¤ day after it becomes law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.