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American Financial Services Association

On Price Controls and Affordability

On Price Controls and Affordability

There are few trade associations with a track record of helping American consumers at every level of the financial spectrum through challenging economic times than the American Financial Services Association. For more than 100 years AFSA member companies have worked with consumers with thin credit files, subprime credit scores, and prime credit to ensure they can access the funds they need, whether to cover every-day costs or big-ticket items for their home or to get to work. That more-than-a-century experience allows us to point out that, historically, price controls rarely if ever accomplish the well-intentioned goal of making daily life financially more affordable.

We made this point in 2025 when Rep. Alexandria Ocasio-Cortez (D-NY) and Sens. Bernie Sanders (D-VT) and Josh Hawley (R-MO) introduced legislation to cap credit card interest rates at 10 percent at a time when the national average interest rate on a credit card was about 22 percent (and has remained at that level). The fact is, it’s robust access to credit that allows consumers to buy what they need when they need it, driving the economy forward. While a lower interest rate might seem appealing to credit card users, the current rate structure puts folks in a better position to weather financial challenges. Interest rates are set to help defray the risk of providing credit to millions of American consumers, including those with less than prime credit. The effect of a rate cap? Credit would no longer be as readily available to the American consumers policymakers are attempting to help. If lenders can’t set an interest rate to mitigate the risk of lending, the lenders will stop making that credit widely accessible.

This was confirmed by a recent working paper issued by the Federal Reserve Bank of New York, which focuses on three states (South Dakota, North Dakota, and Illinois) that implemented 36 percent all-in rate caps on many types of non-bank consumer loans between 2016 and 2022. One of the key conclusions of this research is that. “…lending to the riskiest cohort of borrowers decreased sharply under usury limits. These borrowers were unable to find lower cost loans from banks and credit unions, as proponents of rate caps may have expected [emphasis added]. Nor does delinquency risk for this cohort improve, implying the rate caps reduced credit access but not credit stress.”

The effort to shake the economic drag that has bedeviled consumers since 2020 is necessary and beginning to take hold with recent economic growth expansion. And it’s a good thing that policymakers are laser-focused on helping consumers. But rate caps will never be the panacea some insist they are.

January 10th, 2026

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