A Financial Services Agency panel reached a broad agreement Tuesday to recommend that the "gray zone" that allows for a higher ceiling on consumer loan interest rates be removed to help reduce the rising number of personal bankruptcies, FSA officials said.
Most of the members on the advisory panel agreed that the 29.2 percent ceiling under the Investment Deposit and Interest Rate Law should be repealed to leave only the 15 percent to 20 percent maximum range set under the Interest Rate Restriction Law.
In principle, consumer finance credit card companies are required to charge interest within the 15 percent to 20 percent range. However, they can extend the lending rate up to the 29.2 percent maximum if a borrower agrees in writing to pay the higher rate. A firm can be criminally charged if it applies a rate above 29.2 percent.