Open-End Credit Plans in Virginia: A 36% Cap With a Catch

Not every Virginia lending product is a short-term or title loan. A revolving credit product called an open-end credit plan operates under its own statute, with a rate cap that matches the newer reforms but a structure that works quite differently.

What an open-end credit plan is

An open-end credit plan is a revolving line of credit, similar in structure to a credit card: you’re approved for a credit limit and can draw against it repeatedly, paying interest only on what you’ve actually borrowed, rather than receiving a single lump sum like a short-term loan.

The rate cap

Virginia caps open-end credit plan interest at 36% annually under Va. Code § 6.2-312, and allows a $50 annual participation fee on top. This mirrors the short-term loan cap but without the separate monthly maintenance fee structure.

Why this category exists separately

Open-end credit historically operated under different rules than single-advance loans, which is part of why Virginia regulates it through its own statute. A violation of the open-end credit cap is specifically treated as a prohibited practice under the Virginia Consumer Protection Act, giving borrowers an additional enforcement avenue.

Watching for the credit-service-business loophole

Virginia law also bars credit service businesses from advertising, offering, or performing services connected to an extension of credit above 36% APR for amounts under $5,000 with a term under a year, including for open-end credit plans, closing off a common way lenders elsewhere use intermediaries to route around a rate cap.

What to check before opening one

Confirm the plan is offered by a properly licensed Virginia lender, get the exact APR and any fees in writing, and understand how minimum payments and interest accrual work on a revolving balance, since carrying a balance indefinitely can still add up to significant total cost even under a 36% cap.

How revolving balances can add up

Because an open-end credit plan lets you draw repeatedly against a limit, it’s possible to carry a balance indefinitely, paying interest each month without ever fully paying it off. Even at a capped 36% rate, a long-carried balance can accumulate significant total interest over time.

Comparing this to a credit card

A Virginia open-end credit plan functions similarly to a credit card but through a different regulatory framework. If you already have access to a standard credit card with a comparable or lower rate, it may be a more familiar and equally useful alternative to a dedicated open-end credit plan.

Comparing this to a traditional bank loan

A traditional bank personal loan for a similar amount would typically carry a single-digit or low-double-digit APR for a qualified borrower, making even a capped 36% open-end credit plan meaningfully more expensive for the exact same borrowed dollars if you have access to conventional credit.

Reading your monthly statement carefully

An open-end credit plan statement should clearly break out the interest charged, any annual fee, your minimum payment, and your remaining balance. Reviewing this each month, rather than only glancing at the minimum due, helps you track how quickly the balance is actually shrinking.

Setting a personal rule to pay more than the minimum each month, even by a small amount, meaningfully shortens how long you carry a balance and reduces the total interest paid over time.

This article is for educational purposes only and is not financial advice. Loan amounts, fees, and laws can change, so verify current rules with the Virginia State Corporation Commission’s Bureau of Financial Institutions (BFI) at scc.virginia.gov and confirm any lender is licensed before you borrow.