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Initiative Seeks to Cap Soaring Interest Rates in Montana

By KFBB News Team

Story Created: Sep 1, 2010 at 4:44 PM MST

Story Updated: Sep 1, 2010 at 4:44 PM MST

As average annual interest rates on payday loans soar at 400 percent, a new initiative seeks to make some changes to protect Montanans.

Montana law currently allows for some of the highest rates in the country. While 400 percent is average, lenders can legally charge up to 650 percent interest on payday loans and 300 percent for car title loans.

Many in Montana say that’s too high and today they discussed ballot language that they hope will be the key to capping those rates.

Initiative number 164 seeks to cap interest rates at 36 percent, which is the same rate currently in place for military personnel and their families.

That rate would apply to payday lenders, title lenders, retail installment lenders and consumer loan licensees – drastically reducing the interest, fees and charges they can place on borrowers.

The initiative is supported by local democrat Anders Blewett, as well as republican Jesse O’Hara, with the nearly decade long fight bringing various interest groups as well as both parties together.

“We both look at this the same way. It's just so exploitative of a certain sector of our population; vulnerable seniors, working families, and it's such an unfair and deceptive practice that we both fundamentally agree. And to see it happen and to be a part of it, and to do so with members of the opposite party is an exciting thing for Montanans and I'm happy to be involved in this,” says Blewett (D-HD 21).

Montanans will have the chance to make their voices heard on November 2nd when ballots go out.

A vote in favor of Initiative 164 would support capping interest rates at 36 percent.

Some groups that have announced their support for the initiative include AARP, Montana Catholic Conference and NeighborWorks.

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lenderhchick said on Tuesday, Sep 7 at 2:04 PM

Payday loans are typically for two-weeks not an entire year, and comparing them to ANNUAL interest rates is misleading. Such a rate cap would virtually eliminate payday lenders, but not the need for short-term credit. Instead it forces consumers to choose between more expensive alternatives, such as fees for bounced checks, overdraft protection, late bill payments, reconnection fees for a utility discontinued for lack of payment or even unregulated off-shore Internet lenders.

Socialjoe said on Tuesday, Sep 7 at 12:14 PM

I work in the business and this article is skewed toward the anti-payday arena. This is just propaganda stemming from the initial Military Bill. Congress has even come so far as to admit that the limiting of the APR rate to 36% and the subsequent restriction of payday loans to the military or military families was an error. The limitation of choice for families in need is not a good thing to do anytime but especially bad in these economic times.

ZoeB said on Thursday, Sep 2 at 12:30 PM

This initiative, and many others, was made possible by a New York PR firm. Just another way that special interests cloak their profits in an illusion of democratic initiatives.

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