The NCUA board has approved a plan to continue the agency’s temporary 18% rate ceiling for most loans made by federal credit unions.

Section 107(5)(A)(vi)(I) of the Federal Credit Union Act, 12 U.S.C. 1757(5)(A)(vi)(I), limits federal credit unions to a 15% interest rate ceiling on loans but authorizes the NCUA board to increase rates for up to 18 months after certain required consultations and if certain conditions are met.

One condition of raising the rate ceiling is that money market interest rates must have increased during the preceding six months. NCUA staff concluded that was the case, because there were several occasions during that period when money market rates had risen, and also concluded that certain safety and soundness conditions had been met. 

Had the agency not extended the interest rate ceiling, the current 18% ceiling would have expired on March 10, 2026, and the interest rate would have reverted to 15%. The board’s action extends the temporary 18% ceiling through September 10, 2027.

The NCUA set the current 18% interest rate level effective May 15, 1987. Since then, the NCUA board has voted 24 times to maintain the current interest rate of 18%.

The board’s action also preserves the ability of Federal credit union to charge up to 28% for certain payday alternative loans. The payday alternative loan program is designed to allow credit unions to offer loans to their members who otherwise might have to borrow money through payday lenders.

The decisions to extend the 18% and 28% interest rate ceilings was made by NCUA Board Chairman Kyle Hauptman.  It did not require a formal vote of the NCUA board, since the board currently has only one member, Republican Kyle Hauptman. President Trump fired the two Democratic members, Todd Harper and Tanya Otsuka. The two filed suit challenging their firings; the case is pending in federal court.