Dear Board of Directors and Chief Executive Officer :
This letter communicates the NCUA Board’s decision to continue the current 18 percent interest rate ceiling for loans made by federal credit unions as provided by the Federal Credit Union (FCU) Act. The Board approved the 18 percent rate at its February 23, 2017 open meeting.
The FCU Act generally limits federal credit unions to a 15 percent interest rate ceiling on loans. However, the NCUA Board may establish a higher rate for up to 18 months after considering certain statutory criteria.1 The current 18 percent rate ceiling expires on March 10, 2017. This month’s NCUA Board action extends the 18 percent ceiling through September 10, 2018.
The Board’s decision preserves your federal credit union’s ability to offer a higher rate payday alternative loan (PAL). You may still charge those borrowers up to 28 percent on PALs under the terms and conditions specified in NCUA’s regulations.2
If you have any questions, please do not hesitate to contact your regional office.
J. Mark McWatters
12 U.S.C. §1757(5)(A)(vi)(I).
 12 C.F.R. §701.21(c)(7)(iii). For more details on the PAL program, please use the attached link: http://www.ncua.gov/files/publications/regulations/FIR20100916SmAmt.pdf (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).)