WASHINGTON, DC – Today, the Consumer Choice Center launched a new policy primer on a federal proposal to cap credit card interest rates, analyzing the social and economic costs of such a policy and providing recommendations for policymakers to consider.
Earlier this year, Sens. Josh Hawley (R-MO) and Bernie Sanders (I-VT) introduced a bill that would impose a federally mandated annual percentage rate (APR) cap of 10% on consumer credit cards.
YAËL OSSOWSKI, Deputy Director of the Consumer Choice Center and author of the report, responded:
“Populist proposals to cap credit card interest rates make for good talking points on the Hill, but they are economically devastating. Examples from Illinois and even the nation of Chile show us that rate caps lead to less credit availability, which harms lower-income consumers the most.”
Rather than blocking tens of millions of Americans from accessing credit cards, the Consumer Choice Center’s policy recommendations would ease debt spirals and bolster financial literacy efforts — a better path than dubious rate caps.
“Capping rates below economic reality doesn’t eliminate risk or mollify financial behaviors of consumers, but it does force banks and credit providers to withdraw credit from their customers. That would have an immediate negative impact on millions of American consumers,” concluded Ossowski.
THERE IS A BETTER WAY….
- Promote personalized repayment plans to help borrowers alleviate their debt burden
- Improve transparency so borrowers can compare costs easily
- Expand financial literacy to mitigate debt spirals
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READ THE POLICY PRIMER HERE
The Consumer Choice Center is an independent, nonpartisan consumer advocacy group championing the benefits of freedom of choice, innovation, and abundance in everyday life for consumers in over 100 countries. We closely monitor regulatory trends in Washington, Brussels, Ottawa, Brasilia, London, and Geneva.
Find out more at consumerchoicecenter.org
