High-cost lender Enova wants to be a national bank with 100%-300% loans
Consumer advocates urge regulators to block the bid
Consumer advocates are urging federal regulators to reject a controversial application by high-cost lender Enova International to become a national bank — warning the move could allow triple-digit interest loans to spread across the country and undermine decades of state consumer protections.
In comments filed with the Office of the Comptroller of the Currency (OCC), the National Consumer Law Center (NCLC) and allies said Enova’s bid to acquire Utah-based Grasshopper Bank and convert into a national bank would let the company export annual percentage rates (APRs) of 100% to 300% nationwide.
“During an affordability crisis, when President Trump has supported a 10% cap on credit card rates, his Administration must reject a new national bank that charges 100% to 300%,” said Lauren Saunders, associate director of NCLC, in a news release. “It would be unprecedented for the Trump Administration to sanction a 100% APR bank.”
A path around state interest caps
Today, most states restrict triple-digit lending — but national bank status could change that.
Under federal law, nationally chartered banks can “export” the interest rate allowed in their home state across the country. Advocates warn that if Enova is approved and headquartered in Utah, it could use federal preemption to bypass stricter laws elsewhere.
Consumer groups say that would effectively nullify protections in states that have enacted interest caps on installment loans — a policy supported by voters across the political spectrum.
According to advocates, about 45 states limit or prohibit triple-digit rates on many types of installment loans. But a national charter could override those limits.
“This would be an assault on people across the country and political spectrum who are worried about the affordability crisis and strongly support state interest rate limits,” Saunders said.
High rates and high defaults
Enova operates online lending brands including CashNetUSA and NetCredit, offering installment loans and lines of credit at rates that can exceed 100% and reach 300% APR.
Critics say the company’s loan performance underscores the risks.
Consumer advocates point to reported charge-off rates exceeding 50% — a level they say signals a business model reliant on repeated defaults and refinancing cycles.
That dynamic has long been a hallmark of high-cost lending, where borrowers take out new loans to cover old ones, generating fee income even as consumers fall deeper into debt.
Industry defenders, however, typically argue that higher rates reflect higher credit risk and limited access to traditional credit — a debate that has defined the payday and subprime installment lending sector for decades.
A test case for federal policy
The Enova application lands at a politically sensitive moment.
Interest rate caps have gained unusual bipartisan traction, fueled by rising household debt and persistent inflation in essentials like housing, insurance, and utilities.
Some policymakers have floated broader caps on consumer lending. Advocates backing the Enova challenge are calling for:
A federal 36% interest cap, similar to limits already applied to military borrowers
Legislation requiring national banks to comply with state rate caps
They specifically pointed to proposals from Sens. Jack Reed and Sheldon Whitehouse that would either cap rates or close the bank preemption loophole.
The application must be approved not only by the OCC but also by the Federal Reserve Board, which is accepting public comments through Feb. 27.
Affordability crisis backdrop
The fight over high-cost lending is unfolding amid mounting signs of financial strain among U.S. households — a theme readers of The Outraged Consumer will recognize from recent debt and delinquency coverage.
Credit card balances remain near record highs, and delinquencies have climbed from pandemic lows, particularly among lower-income borrowers. Auto loan defaults have also been rising, with subprime borrowers hit hardest.
Advocates argue that approving a triple-digit APR national bank during such conditions would amplify the pressure.
“This is exactly the wrong moment to expand predatory credit,” consumer groups wrote in their comments.
Regulatory stakes
The decision could have implications far beyond a single lender.
Approval might encourage other high-cost fintech lenders to pursue bank charters, accelerating a migration from state-regulated lending models to federally chartered structures with broader rate authority.
That dynamic has already been visible in partnerships between fintech lenders and small banks, which critics say allow nonbanks to benefit from federal preemption without full bank oversight.
Blocking the application, by contrast, would signal that regulators are unwilling to extend national bank privileges to companies built on triple-digit lending models.
What comes next
Regulators have not publicly indicated a timeline for decisions, but both the OCC and Federal Reserve will weigh public comments, supervisory concerns, and broader policy implications.
For consumers, the outcome could shape the future of interest rate protections — determining whether state caps remain meaningful guardrails or become easier to sidestep.
Data Box: High-Cost Lending by the Numbers
100%–300% APR: Rates cited for Enova products
50%+ charge-offs: Reported default levels critics cite as evidence of unsustainable loans
45 states: Jurisdictions that restrict triple-digit installment loan rates in some form
36% cap: Rate limit advocates want applied nationwide
Why this matters
This story sits at the intersection of two major trends:
Rising consumer debt and delinquency pressures
Regulatory fights over interest rate caps and bank preemption
If approved, Enova’s application could become a watershed moment — testing whether federal regulators will expand national bank powers in ways that reshape consumer lending nationwide.