Rule caps fees, rates for soldiers
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The Pentagon has implemented a regulation aimed at protecting U.S. soldiers and their families from high-interest, short-term loans.
The new rule, which Congress approved in September 2006, caps fees and interest rates creditors can charge military personnel on payday loans, vehicle title loans and tax refund anticipation loans. Despite criticism from consumer advocates, the rule will go into effect without limits on fees and interest rates on credit cards, overdraft loans and other open-ended credit.
The new rule, which caps interest that military members and their dependents can pay on applicable loans at 36% annually, applies to all financial institutions, including U.S. banks.
Consumer advocates have been critical of the limited scope of the rule. Banks and other lenders lobbied the Pentagon for certain exemptions.
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