Strange Capitol Hill Bedfellows Want to Cap Credit Card Rates
Bipartisan legislation would limit rates to 10%
Reaching across the political aisle, two of the most prominent progressives in Congress are working with two outspoken Republicans to introduce a bill that would limit the rates Americans pay on credit card interest to just 10 percent.
Reps Alexandria Ocasio-Cortez (D-NY) and Anna Paulina Luna (R-Fla) introduced legislation that would immediately cap credit card interest rates at 10 percent. Sens Bernie Sanders (I-VT) and Josh Hawley (R-Mo) introduced companion legislation last month in the Senate.
Currently, issuers often charge consumers twice that — or more — in credit card interest.
While banks borrow at the federal interest rate of 4.25 percent , credit card interest rates have nearly doubled over the last decade to 23.8 percent, allowing credit card companies to reap massive profits while consumers struggle to keep up with debt, the lawmakers behind this new legislation said.
“Credit cards with high interest rates regularly trap working people in endless cycles of debt. At a time when families are struggling to make ends meet, we cannot allow big banks to shake down our communities for profit,” Ocasio-Cortez said in a statement. “During his campaign, President Trump pledged to cap credit card interest rates at 10%. We're making that pledge more than a talking point by introducing legislation to protect working people from remaining trapped under mountains of debt.”
Credit card debt owed by American consumers is growing. Credit card balances, which now total $1.21 trillion outstanding, grew by $45 billion during the fourth quarter and are 4.0 percent above the level a year ago, according to data from the New York Federal Reserve Bank.
“I’m proud to be the bipartisan co-lead to this legislation. For too long, credit card companies have abused working class Americans with absurd interest rates, trapping them in an almost insurmountable amount of debt,” said Luna, in the same joint statement. “We need a fair solution - and that means getting rid of the status quo and putting a reasonable cap on interest rates.”
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