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by The Regional Nation of The Northern Light. . 134 reads.

Vote For GA resolution Minimum Payment Act


General Assembly Vote Recommendation

Part of the Information for WA Voters program

Resolution at Vote: Minimum Payment Act
Vote Recommendation: For

Resolution Analysis
Overview
This proposal bans lenders that offer unsecured retail credit lines, such as credit cards and personal loans, to charge minimum payments over the payment period that are lower than the interest payable on the loan itself. If the lender sets a minimum payment lower than the interest payable, that payment must be treated as if it were in the minimum amount and the lender thus forfeits the difference between the minimum payment and the interest payable for that period.

Recommendation
We support the resolution, which prevents a snowballing of debt by way of individual borrowers failing to pay off at least the interest payable for that interest period (in real life, depending on jurisdiction, usually biweekly or monthly). This prevents the borrower's debt situation from spiralling out of control (inadvertently or otherwise) by getting the interest (and any fees) added to the principal and creating a bigger burden on the borrower over time, which the borrower may not be able to service. The restriction applies only to unsecured retail loans, and excludes corporate borrowers, which are more likely to be able to manage loans with deferred payment of interest in a sophisticated manner.

For the above reasons, the Ministry of World Assembly Affairs recommends a vote For the General Assembly Resolution at vote, "Minimum Payment Act".

This IFV Recommendation was written in collaboration with our World Assembly Legislative League partners.

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