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RI lawmakers mull cap on payday loan rates

PROVIDENCE, R.I. (AP) -- Lawmakers in Rhode Island are taking another look at a proposal to limit the interest charged on payday loans — a proposal that has failed repeatedly in recent years in the face of strong opposition by payday lenders.

The House Finance Committee is scheduled to hear from supporters and opponents during a hearing on the bill Wednesday.

The proposal, sponsored by Rep. Frank Ferri and Sen. Juan Pichardo, would cap interest rates at 36 percent. Now, payday loans come with annualized interest rates of up to 260 percent.

Supporters say the loans can trap low-income consumers in a cycle of debt.

But owners of the businesses say they provide a valuable financial tool and that capping interest rates could force them to close.