Bipartisan Effort to Limit Interest Rates
Senators Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.) have introduced a bill aimed at capping credit card interest rates at 10%. This move marks a rare collaboration between the two lawmakers, who often hold differing political views.
Credit card interest rates, the fees charged by issuers when balances are not paid in full by a certain date, currently average over 20%, according to data from Bankrate. The proposed cap seeks to address the growing burden of high-interest credit card debt on American consumers.
The bill follows a similar proposal made during the 2024 election campaign, where a presidential candidate pledged to implement a temporary cap on credit card interest rates. The legislation, if passed, would remain in effect for five years.
Arguments for the Proposal
Sanders and Hawley argue that exorbitant credit card interest rates place an undue financial burden on working-class Americans. Sanders criticized financial institutions for charging over 25% interest, stating that such practices amount to “extortion and loan sharking” rather than fair lending.
Hawley echoed these concerns, calling the proposed cap a “simple way to provide meaningful relief to working people.” According to both senators, lowering credit card interest rates would prevent banks from profiting at the expense of consumers struggling with rising debt.
As credit card debt continues to soar, reaching $1.17 trillion in the third quarter of 2024, supporters of the bill see it as a necessary step in addressing the financial challenges faced by many Americans.
Industry Opposition and Potential Challenges
Despite the bill’s potential benefits for consumers, it is expected to face significant resistance from the banking and credit card industry. Industry representatives argue that imposing a cap on interest rates would have unintended negative consequences.
The American Financial Services Association, a national trade group representing the consumer credit industry, previously stated that rate caps are “unworkable” and could actually harm consumers by reducing their access to credit. In a September statement, the association emphasized its support for “pro-consumer policies that provide more choices and financial flexibility,” while arguing that capping interest rates is not the right approach.
The bill will likely undergo intense debate as lawmakers, financial institutions, and consumer advocacy groups weigh its potential impact. While its passage remains uncertain, the proposal highlights the growing concern over high-interest debt and the search for solutions to ease financial pressures on American households
