Bounced check fees, small loan fees go up under bill
Posted April 16, 2019 4:44 p.m. EDT
Updated April 16, 2019 7:27 p.m. EDT
Raleigh, N.C. — A bill to increase bounced check fees, and double some loan origination fees, moved forward at the statehouse Tuesday with a boost from House Republican leadership.
House Bill 327 would increase the state cap on returned check fees from $25 to $35, raising that fee for the first time in more than 20 years.
The bill also reworks origination fees for consumer loans. The maximum now is $25 for loans up to $2,500 and 1 percent for larger loans, with a $40 cap. That would change to a $50 maximum for loans up to $5,000 and 1 percent of the loan above $5,000, without the cap.
These loans run up to $15,000, so the highest origination fee that could be charged would be $150.
These fees haven't increased since 2002, though advocates for the poor said interest rates that the consumer loan industry can charge increased in 2013. Both the North Carolina Justice Center and the Center for Responsible Lending opposed the bill, arguing in part that people who get these loans don't always understand them and get trapped in a cycle of debt.
The bill cleared the House Banking Committee, but only because two members of the House GOP leadership sat in, providing the votes needed to overcome Republican absences among regular committee members and the committee Democrats who voted against the measure.
The party-line vote was 5-4, with House Rules Chairman David Lewis and House Majority Leader John Bell providing the margin. The bill also cleared the House Rules Committee Tuesday on a voice vote that appeared to fall along party lines. The bill may be on the House floor late next week, when the House returns from Spring break.
Lewis, R-Harnett, called the increases "a reasonable adjustment for a legal business." Rep. John Szoka, R-Cumberland, who sponsored the bill, said the increases are less than inflation would suggest since the last increase, and he said the regular banking industry has already gotten increases it requested.
"The loan origination fee is a very modest increase," said Szoka.
The check fee increase would affect everyone who bounces a check, but it was requested by the consumer lending industry, according to Kelly Turnow of the Center for Responsible Lending.
McNeil Chestnut, an attorney and lobbyist for small lenders, said that the industry gets a bad rap, but it sees very few complaints despite making hundreds of thousands of loans a year. He said the average salary for people getting these loans is above $45,000 a year.
Chestnut also said the more traditional banking industry already got approval to increase its origination fees this session, and no one complained in the banking committee.
That measure, House Bill 162, passed with overwhelming majorities in both the House and the Senate, and it's one of the half-dozen bills the governor has already signed into law this year.