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Initiated Measure 21 Caps South Dakota’s Interest Rate At 36 Percent

Kealey Bultena

Two out of ten ballot measures up for vote in South Dakota deal with interest rates. Initiated Measure 21 caps interest rates at 36 percent.

Opponents of the measure say that cap would choke the industry.


A coalition of South Dakota churches and concerned citizens are backing a proposal to cap interest rates at 36 percent. Supporters say it would rope in payday loan companies that charge upwards of 500 percent on short term loans.

Steve Hildebrand is co-chair of the bi-partisan group South Dakotans for Responsible Lending. He says South Dakota has the highest interest rates in the country. He says IM 21 is a happy medium for payday lenders and those needing a loan.

“Thirty six percent is a percentage that congress put forward about 20 years ago to protect military families who were being targeted by payday lenders,” Hildebrand says. “There was a study done that said this is a rate a payday lender could still make money on a high risk loan, but the person taking the loan would still have an opportunity to get out from it, be able to pay it back.”

Hildebrand says most who take out a payday or car title loan are desperate…

“They believe, I believe wrongly, but they believe that it’s the only option that they have. And so they take out a loan that they really don’t have the capacity to pay back. And so what happens is these payday lenders are pretty slick and pretty conniving and pretty convincing, to take advantage of this desperate moment for this low income person. And so, the loans get flipped and flipped and flipped and that’s where we get to those 574 percent interest rates.”

Select Management Resources is a group from Alpharetta, Georgia, about thirty miles north of Atlanta. According to most recent campaign disclosure filings in late May with the Secretary of State, that group has pumped in almost 200,000 dollars into a Political Action Committee called Give Us Credit South Dakota. They oppose IM 21. Select management Resources has also filtered money to support Constitutional Amendment U, which seeks to cap interest rates at 18 percent for verbal agreements.

Neither a spokesperson for Give Us Credit South Dakota nor Select management Resources could be reached for comment. In the past, payday lenders say they provide a service to people who can’t get loans other places because lending to them is so risky. They say capping interest rates would ruin the industry.