WASHINGTON — Credit union trade associations praised the evenhandedness of the Department of Defense's final rule capping closed-end credit interest rates for members of the military and their families.

On Aug. 31, the DoD released its final regulation capping interest rates–and creating a new Military APR–at 36% on closed-end credit that is a payday loan, vehicle title loan, or tax refund anticipation loan with an effective date of Oct. 1. The rule was required under the John Warner National Defense Authorization Act for Fiscal Year 2007; the law came about when the media and others honed in on the issue of predatory lending, particularly in areas around military installations where personnel are typically young, financially inexperienced, and not paid much but regularly.

Payday loans are defined as close-end transactions with a term of 91 days or less and $2,000 or less. Vehicle title loans are capped at 180 days and secured by vehicle title under the final rule. Finally, tax refund anticipation loans are closed end loans providing the creditor the right to receive all or part of the borrower's refund as repayment. The rule also prohibits extending credit to a covered borrower in order to roll it over with the same creditor but permits "beneficial" workout loans and other