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S2781119th CongressWALLET

Protecting Consumers from Unreasonable Credit Rates Act of 2025

Sponsored By: Senator Durbin, Richard J. [D-IL]

Introduced

Summary

A 36 percent cap on the total cost of consumer credit would limit how much interest and fees lenders can charge by counting almost all charges toward a single annualized rate.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 3 benefits, 0 costs, 0 mixed.

Penalties and refunds for rate violations

If enacted, payments on loans that break the 36% cap would be void and unenforceable. The creditor or any later holder would have to promptly return the principal, interest, charges, fees, and any security interest to the consumer. Violations could be raised at any time as a defense, and criminal penalties could include up to 1 year in prison and a fine equal to three times the debt or $50,000, whichever is larger, per violation. State attorneys general could sue to enforce the rule within three years and seek injunctions, and the Bureau could not exempt these rates from the statute's rules.

36% cap on consumer credit costs

If enacted, the bill would bar consumer credit with a combined fee-and-interest rate above 36 percent. The rule would apply to any credit to a consumer and counts almost all charges when measuring the rate. Some small fees for installment loans could be excluded only under tight rules: application/participation fees no more than $30 or 5% (up to $120) if they meet conditions, late fees no more than $8 per late payment or per month if allowed by State law, and insufficient-funds fees no more than $15 for a check. The Consumer Financial Protection Bureau could adjust those dollar tolerances for inflation and to stop circumvention.

New FAIR rate calculation and disclosure

If enacted, the bill would set standard formulas to compute the new combined fee-and-interest rate (called the FAIR rate). For open-end plans, it would annualize fees by dividing the last 12 months of fees by the average daily balance, or scale charges if the account is under 12 months. For closed-end loans, it would use the usual APR method but count all fees the bill defines. The bill would also require showing the FAIR rate on open-end disclosures and let the Bureau require similar FAIR disclosures for other loans.

Sponsors & CoSponsors

Sponsor

Durbin, Richard J. [D-IL]

IL • D

Cosponsors

  • Sen. Blumenthal, Richard [D-CT]

    CT • D

    Sponsored 9/11/2025

  • Sen. Whitehouse, Sheldon [D-RI]

    RI • D

    Sponsored 9/11/2025

Roll Call Votes

No roll call votes available for this bill.

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