WASHINGTON, D.C. – Leading financial groups that represent banks and credit unions of all sizes, along with the payments and fintech industries, today sent a letter to Representatives Alexandria Ocasio-Cortez (D-N.Y.) and Anna Paulina Luna (R-Fla.) to oppose their proposed legislation that would create an annual percentage rate (APR) cap for credit cards at 10 percent.
This misguided legislation, which is accompanied by a Senate bill from Senators Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.), would severely restrict the availability of this type of credit for everyday consumers and effectively harm the very people the proposed legislation seeks to protect.
As outlined in the letter, research clearly shows that government price setting, including APR caps, hurts consumers:
“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 letter goes on to explain how credit cards are a primary vehicle for expanding financial inclusion:
“Credit cards bring more consumers into the well-regulated credit markets than ever before through underwriting innovations that offer credit to previously “credit invisible” consumers and deep subprime consumers […] These improvements in consumer financial resilience are partially due to actions banks have taken, such as higher minimum payment requirements, to ensure consumers make more progress paying down their balances.”
Finally, the letter highlights how interest rate caps hurt consumers and have disproportionate negative effects on high‐risk borrowers, the exact population they are intended to help:
“Other research demonstrates that when consumers lose access to credit, they often reduce spending on essentials such as healthcare, education, and food, and are more likely to fall behind on bill, mortgage, and rent payments. Lacking a credit card would also likely reduce their consumption of items like furniture and clothing which not only negatively affects consumers, but also negatively affects the broader economy.”
To read the full letter, click HERE.
CBA Advocacy
To read our letter to Sens. Josh Hawley (R-Mo.) and Bernie Sanders (I-Vt.) opposing their rate cap legislation, click HERE.
To learn more about how rate caps hurt the very consumers they’re supposed to protect, click HERE.
To read our blog post examining the myths and facts of how credit card interest rate caps harm consumers, click HERE.
To read the CBA Chart Book that includes analysis on the credit card market, click HERE.
To read our Facts Matter blog post on the CARD Act analysis of the credit card fee landscape, click HERE.
To read our Facts Matter blog on the CARD Act highlighting banks’ positive impact on consumers’ financial resilience, click HERE.
###
Media Contacts:
Weston Loyd
Consumer Bankers Association
Sarah Grano
American Bankers Association
Molly Safreed
America’s Credit Unions
MSafreed@americascreditunions.org
Ed McFadden
American Financial Services Association
Austin Anton
Bank Policy Institute
Nicole Swann
Independent Community Bankers of America
Scott Talbott
Electronic Transactions Association
Molly Moran
National Bankers Association
About the Trade Associations:
About CBA
The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on X @consumerbankers.
About ABA
The American Bankers Association is the voice of the nation’s $24.2 trillion banking industry, which is composed of small, regional and large banks that together employ approximately 2.1 million people, safeguard $19.1 trillion in deposits and extend $12.6 trillion in loans.
About America’s Credit Unions
America’s Credit Unions is the unified voice for not-for-profit credit unions and their more than 140 million members nationwide. America’s Credit Unions provides strong advocacy, resources and services to protect, empower, and advance credit unions and the people and communities they serve. For more information about America’s Credit Unions, visit AmericasCreditUnions.org.
About AFSA
Formed in 1916, the American Financial Services Association (AFSA) is the primary trade association for the consumer credit industry, protecting access to credit and consumer choice. AFSA’s more than 450 corporate members provide consumers with many kinds of credit, including traditional installment loans, direct and indirect vehicle financing, mortgages, payment cards and non-vehicle retail sales finance.
About BPI
The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.
About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.
As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.
About ETA
The Electronic Transactions Association (ETA) is the world’s leading advocacy and trade association for the payments industry. Our members span the breadth of significant payments and fintech companies, from the largest incumbent players to the emerging disruptors in the U.S. and in more than a dozen countries around the world. ETA members make commerce possible by processing approximately $52.7 trillion annually in purchases and P2P payments worldwide and deploying payments innovation to merchants and consumers.
About NBA
Founded in 1927, the National Bankers Association (NBA) champions minority depository institutions, advocating for mission-driven banks that serve underserved and low- to-moderate-income communities. Representing community banks across 43 states and territories, NBA promotes economic empowerment, capital access and financial inclusion. Learn more at www.nationalbankers.org.