Since the enactment of the Consumer Credit (Amendment) Act in 2022, interest rates on moneylender loans in Ireland have been capped, bringing the maximum allowable simple interest to 1% per week, or 48% per year. In terms of annual percentage rate (APR), the new limit stands at 152.35%, a significant reduction from previous maximums of around 188% APR, or 288% where collection charges were added.
The legislation, which also rebranded this form of borrowing as “high-cost credit,” is designed to protect consumers while acknowledging the higher risk and administrative costs associated with small loans. The Central Bank of Ireland defines high-cost credit as any lending above 23% APR, covering cash loans, credit for goods from retailers or online catalogs, and credit to pay insurance premiums.
A recent review by the Central Bank shows that around 288,000 high-cost loans are currently active in Ireland. Of these, approximately 31,000 are small cash loans, typically averaging €1,000 each, with most charging the maximum 152.35% APR. The review found that despite the cap, the supply of high-cost credit has not diminished. The report underlines the role of this sector in promoting financial inclusion by providing access to credit for borrowers who may be unable to obtain loans from mainstream providers.
While high-cost credit remains accessible, experts stress the importance of offering lower-cost alternatives. Community-based institutions, such as credit unions, have long provided more affordable options. About half of Irish credit unions offer the “It Makes Sense Loan,” a small, standard-interest loan aimed at social welfare recipients to reduce reliance on high-cost lenders while rebuilding credit records. Currently, around 5,000 such loans are active.
Community development finance models abroad, such as Fair For You in the UK or Community Development Credit Unions in the US, demonstrate that affordable lending to lower-income borrowers is feasible while supporting financial resilience. These institutions provide loans to people with lower credit scores without the excessive costs of high-interest moneylenders. In the US, the Community Reinvestment Act of 1977 encouraged banks to serve all communities, including those with low and moderate incomes, as a way to prevent exclusionary practices like redlining.
In Ireland, financial experts say more work is needed to expand access to affordable credit. The Credit Union (Amendment) Act 2023 allows the maximum interest rate for credit unions, currently 12.67% APR, to be adjusted by ministerial order, creating potential for a broader range of lending products in the future. Advocates stress that designing equitable financial access requires collaboration across regulators, lenders, and policymakers to reduce dependence on high-cost credit and build sustainable financial inclusion.
