Policy: Law

House panel hears bill on pay day loan curbs

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News,Business,Congress,Finance and Banking,Law

PROVIDENCE, R.I. (AP) — The House Finance Committee has heard testimony on a bill that would prohibit "pay day" lenders from charging as much as 260 percent interest on the loans.

The legislation, sponsored by Rep. Frank Ferri, was being considered Wednesday afternoon. It would eliminate a special exemption for pay day lenders in Rhode Island that allows them to charge more than 36 percent.

Ferri and other lawmakers have tried unsuccessfully in recent years to cap the interest rates charged on pay day loans. Critics say the practice of charging as much as 260 percent is predatory and call the cash advances "debt traps." Those in the industry say the loans are a valuable tool for many.

Members of the Rhode Island Payday Lending Reform Coalition testified in favor of the bill.

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