AFSA Opposes Credit Card Interest Rate Cap
Today, Senators Bernie Sanders (I-VT) and Josh Hawley (R-MO) are introducing legislation to cap credit card interest rates at 10 percent. The legislation would be in effect for five years.
AFSA was quoted in the NYT opposing the bill: The American Financial Services Association, a trade organization for credit card issuers, has said rate caps are “’unworkable’ and ‘actually harm the consumers policymakers are trying to help, by limiting the types of credit tens of millions of Americans depend on more than ever.’”
As AFSA has stated before, legislation or regulation capping late fees misunderstand the role these fees play in the marketplace. When consumers pay late, their credit scores drop, and they face an increase in the cost of future credit and a reduced ability to access credit, and fees act as a deterrence measure. Late fees also help financial institutions manage the risk. If financial institutions are unable to price for risk, they will raise prices across the board, limit rewards programs, or limit credit availability. None of the outcomes above is good for consumers.
AFSA is continuing to educate members on the issue and does not anticipate broad Republican support for this legislation. However, President Trump has previously said that he would support a temporary cap on credit card fees. During his confirmation hearing, Treasury Secretary Bessent did not take an affirmative side on the late fee cap issue, but said he would support the whatever president’s policy decision was.
February 4th, 2025
