U.S. Reps. Alexandria Ocasio-Cortez (D-NY) and Anna Paulina Luna (R-FL) introduced a bill that would immediately cap credit card interest rates at 10 percent.
The bill (H.R. 1944) states that the annual percentage rate applicable to an extension of credit obtained by use of a credit card may not exceed 10 percentage points, inclusive of all finance charges.
If a credit card annual percentage rate or fee greater than that has been paid, the person by whom it has been paid, may, by bringing an action not later than 2 years after the date on which the collection was last made, recover back from the lender the entire amount of interest, finance charges, or fees paid.
“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. During his campaign, President Trump pledged to cap credit card interest rates at 10 percent. We’re making that pledge more than a talking point by introducing legislation to protect working people from remaining trapped under mountains of debt,” Ocasio-Cortez said.
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, the lawmakers said.
“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. We need a fair solution – and that means getting rid of the status quo and putting a reasonable cap on interest rates,” Luna said.
U.S. Sens. Bernie Sanders (I-VT) and Josh Hawley (R-MO) introduced companion legislation last month in the Senate.
Several financial industry groups, including the American Bankers Association, sent a letter to the lawmakers, voicing their opposition.
“This bill would eliminate access to credit cards for millions of consumers and drive them to sources of credit which are far more costly and less regulated. Many consumers who currently rely on credit cards would be forced to turn elsewhere for short-term financing needs, including pawn shops, auto title lenders, or worse– such as loan sharks, unregulated online lenders, and the black market,” the groups wrote in a letter.