Washington, D.C. – Today, Sen. Bernie Sanders and U.S. Rep. Alexandria Ocasio-Cortez are introducing legislation in their respective chambers to put a cap on credit card interest rates.
Yael Ossowski, Deputy Director of the Consumer Choice Center (CCC), said “This measure to cap credit card interest rates may be well-intended, but it will ultimately end up hurting low-income Americans who need access to credit most desperately.”
"By placing a cap on credit card interest rates, borrowers who would otherwise use credit cards to pay bills and buy groceries for their families will be the first ones forced out of the credit system," said Ossowski.
"The people who need access and who depend on credit cards to cover large transactions between paychecks are usually those who cannot otherwise gain access to credit and loans from banking institutions. If a cap on rates is passed, these borrowers will be pushed out of the credit card market and will be forced to take out loans at exorbitant rates by other, possibly illegal, means.
"Thankfully, there are legions of credit cards and credit unions that can offer low or zero interest rates to consumers as introductory offers. Mandating a cap would mean these offers would virtually disappear, making it even harder for the less well-off to afford to pay bills.
"At the same time, extending the U.S. Postal Service's mandate to become a bank is just inviting trouble, especially for a government service that can barely make a profit as it is. It is wishful thinking to suggest that politicians in Washington will be the ones to revolutionize banking for everyday Americans.
"Reducing credit card interest rates for ordinary consumers is a noble goal, but a federal cap will do more to harm consumers than good, especially the people that depend on these cards to cover their week-to-week expenses," said Ossowski.
The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.
The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.