A bill for an act relating to annual percentage rates for delayed deposit service transactions.(Formerly HF 627.)

House File 878 (HF 878) is a bill introduced in the Iowa General Assembly on March 7, 2025, aimed at regulating the annual percentage rates (APRs) for delayed deposit services, commonly known as payday loans. The bill seeks to establish a cap on the interest rates that can be charged for these short-term, high-interest loans, thereby protecting consumers from exorbitant fees and potential debt cycles. As of April 3, 2025, the bill was referred to the House Commerce Committee for further consideration.

Supporters of HF 878 argue that capping APRs on payday loans is a necessary step to protect vulnerable consumers from predatory lending practices. By limiting the interest rates, the bill aims to prevent borrowers from falling into cycles of debt caused by high fees and interest. Consumer advocacy groups and financial reform proponents have praised the bill for promoting fair lending practices and enhancing financial stability for Iowa residents.

Opponents of HF 878, including some payday lending businesses and industry representatives, contend that imposing a cap on APRs could reduce the availability of short-term credit options for consumers who may not qualify for traditional loans. They argue that such regulations might lead to the closure of payday lending establishments, resulting in job losses and limiting financial options for individuals in urgent need of funds. Critics also suggest that consumers might turn to unregulated or illegal lenders, potentially exposing them to greater risks.