On Election Day, voters in Nebraska voted to put significant limits on the interest rates payday lenders can charge.
A 400% interest rate on small-dollar loans is the average across the States. Now that 83% of Nebraska’s voters have approved Initiative 428, that won’t be the case in this Midwestern state: Payday lending interest rates will soon be capped at 36%.
Nebraska, in addition to D.C, is the 17th state to implement such a cap. Other states to have pushed such a measure in recent years include Colorado, Ohio, Montana, and South Dakota.
According to the Nebraskans for Responsible Lending coalition, which helped put the initiative on the ballot, the average interest rate for a payday loan in Nebraska has been 404%.
In South Dakota, before 2016, payday lenders charged up to 574% interest. According to Brookings, the volume of payday alternative loans offered by credit unions grew considerably when the state voted to cap interest rates at 36% in the last US election.
The Center for Responsible Lending (CRL), a consumer advocacy group that supports expanded regulation of the industry, said to Market Watch, “There is just something wrong with triple digit interest rates and trapping people in cycles of debt.”
Federal Advocacy Director at the CRL, Ashley Harrington, stated, “This transcends political ideology.” She continued, “Everyone should be able to get behind safe, affordable consumer loans that don’t have triple-digit interest rates.”