Texas Regulator Agrees To Soft Cap On Payday Loan Fees

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AUSTIN, Texas – The Texas CU Commission last Friday agreed to cap application fees for short-term payday loans at $20, except for those credit unions who may choose to challenge the safe harbor provision of the state’s usury laws by proving a higher fee is reasonable to allow it to recoup costs for the program.

The soft cap does not prohibit a higher fee but will put the burden on any credit union that exceeds the charge to prove it is a reasonable fee for making or closing a loan, according to Harold Feeney, commissioner for the Texas CU Department.

The provision will set up the Department and the Commissioner as the final arbiter on whether the fee is reasonable.

The final rule represents a compromise from the original proposal, which would have set a firm, $20 cap with no exceptions.

While only a handful of state chartered credit unions currently make short-term payday loans, the Texas CU League has started a program aimed at introducing such programs across the state.


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