Two Senators Want to Cap Credit-Card Rates at 10%. Banks Say That Would Cut Credit Access | Global News Avenue

A pair of senators from both parties want to limit your credit card interest at less than half of your typical interest rate. They may have the support of President Donald Trump, but the banks aren’t that excited.

The industry is writing a bill with R-Missouri Republican Senator Josh Hawley and I-Vermont Democratic Senator Bernie Sanders that will temporarily cap it at a rate of 10%. Much lower than current Average APR is 24.37% Depend on Investopedia. Industry groups say the proposal is price control and will “severely limit consumers’ credit card availability.”

Analysts say the bill has few chances of passing. However, it effectively formalizes a proposal that Trump floats on the campaign while we are Credit card debt is increasing.

The author says the ceiling will give Americans relief. Issuer says it will limit credit

The Senators announced the bill last week. They want to block the shot for five years.

“Americans are trapped in record credit card debt, and the largest credit card issuers will increasingly hike their interest rates to the moon,” Hawley said in a press release. “It’s not only wrong, it’s exploitative.”

Meanwhile, Sanders said credit card companies are making “huge profits to deprive the American people of the United States.”

Trade groups including the Consumer Bankers Association, the American Credit Union and the American Financial Services Association argued that their bills would force issuers to limit access to credit cards because on 10% APR Providing them will prompt the lender to prompt the lender to go to the credit card. Lose money. Without credit cards, millions of consumers would turn to “more expensive, less regulated” credit options, the groups wrote.

Credit card debt totaled $11.17 trillion in the third quarter of 2024, according to the latest data provided by the Federal Reserve Bank of New York. This is 33% higher than the third quarter of 2019 before the pandemic.

The cap has “no feasible path at all”

Ian Katz, a financial policy analyst at Capital Alpha Partners, wrote in a recent note to clients.

He wrote that past measures failed to gain appeal. . Katz wrote that the new bill is lower than the previously proposed ceiling, which would “raise questions about the issuer’s desire to engage in the business.”

Mr. Trump temporarily raised the interest rate cap last year, Katz wrote, and he remains a “wildcard” if he returns to the idea and forces Republicans to take a closer look.

“We will temporarily cap credit card rates when Americans catch up with work,” Trump said at a campaign rally in September. “We will limit it at about 10%. We can’t let them make 25% and 30%.”

“We have little affirmation about Washington right now, but we can say that: The bill will not become law,” BTIG policy analyst Isaac Boltansky wrote in a note to clients.