News suggests bipartisan support for capping credit card rates at 10%

From Yahoo Finance: 2025-03-19 15:46:00

Lawmakers from both sides of the political spectrum are teaming up to introduce bills capping credit card interest rates at 10%. The average APR at the end of last year was about 21.5%, up from 14.7% in 2020, according to the Federal Reserve. These bills are seen as political signaling exercises for now.

With rising interest rates fueling increasing delinquencies, the cost of credit has become a pressing issue. About half of credit card accounts revolve a balance from month to month, and 13% of cardholders make only the minimum payment due, according to the Consumer Financial Protection Bureau.

Capping credit card interest rates may limit what card issuers can charge customers. However, economists note that this could lead to less access to credit for Americans with weaker credit scores. The challenge is finding the balance between protecting consumers from overborrowing and maintaining access to credit for those in need.

At least 76 countries have usury laws limiting lending rates. In the US, at least 26 states place restrictions on payday lenders. Studies on the impact of payday loan limits have yielded conflicting results, with some suggesting drawbacks and others indicating positive outcomes.

A proposed 10% rate cap on credit card interest could have a significant impact, potentially cutting off access to credit for many consumers. Concerns exist about companies finding ways to circumvent the cap, but the bill aims to prevent this. Looser limits may have some political traction in Washington in the future.

A bipartisan bill that would extend a 36% rate cap on loans to all Americans was nearly reported out of committee in 2019 but was derailed by the pandemic. This bill could potentially make a comeback in the future. Overall, the debate about credit card interest rate caps continues to evolve in the political sphere.

Read more: Credit card rates should be capped at 10%