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THE SENATE |
S.B. NO. |
737 |
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TWENTY-EIGHTH LEGISLATURE, 2015 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO CHECK CASHING.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that in 2005, the state auditor prepared a sunrise analysis in anticipation of the regulation of check cashers regarding the issuance of deferred deposit agreements. Deferred deposit agreements are commonly referred to as payday loans and are small, short term, unsecured loans that borrowers commit to repay from their next paycheck or a regular income payment.
Chapter 480F, Hawaii Revised Statutes, permits a check casher to charge a fee of fifteen per cent of the face amount of the check for a deferred deposit agreement. The maximum amount of the check is capped at $600. According to the auditor, under this scenario, the interest charged to a borrower can amount to four hundred fifty-nine per cent annualized interest rate on a fourteen day loan.
The legislature further finds that it is in the interest of the public to limit the interest rate a check casher is allowed to charge by way of a deferred deposit agreement. This would help to limit the problem of borrowers being led into a debt trap from which they cannot escape.
The purpose of this Act is to limit the total amount of fees charged for the deferred deposit of a personal check to an annual percentage rate of thirty-six per cent.
SECTION 2. Section 480F-4, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) The face amount of the check shall
not exceed $600 and the deposit of a personal check written by a customer
pursuant to a deferred deposit transaction may be deferred for no more than
thirty-two days. [A check casher may charge a fee for deferred deposit of a
personal check in an amount not to exceed fifteen per cent of the face amount
of the check.] The total amount of fees for the deferred deposit of a
personal check shall not exceed an annual percentage rate of thirty-six per
cent. Any fees charged for deferred deposit of a personal check in
compliance with this section shall be exempt from chapter 478."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.
Report Title:
Check Cashing; Deferred Deposit Agreements; Fees; Annual Percentage Rate
Description:
Caps the total amount of fees charged for the deferred deposit of a personal check to an annual percentage rate of thirty-six per cent. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.