Sen. Bernie Sanders (I-Vt.) and Sen. Josh Hawley (R-Kan.) agree on very little politically. But the very liberal and very conservative lawmakers are co-sponsoring legislation to place a 10% cap on credit card interest rates.
During the recent presidential campaign, President Trump also advocated the cap on rates that now average above 20% APR.
In a joint statement, the two senators laid out the reasoning behind their bill.
“Working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon,” Hawley said. “It’s not just wrong, it’s exploitative and it needs to end. Capping credit card interest rates at 10%, just like President Trump campaigned on, is a simple way to provide meaningful relief to working people. Let’s do it.”
Sanders said Republicans and Democrats can agree on this legislation because it will bring financial relief to a large number of Americans.
“When large financial institutions charge over 25% interest on credit cards, they are not engaged in the business of making credit available,” Sanders said. “They are engaged in extortion and loan sharking. We cannot continue to allow big banks to make huge profits ripping off the American people. This legislation will provide working families struggling to pay their bills with desperately needed financial relief.”
Falling deeper in debt
A recent report from the Federal Reserve Bank of Philadelphia found consumers’ credit-card balances in the third quarter rose to their highest levels since 2012. The report showed more consumers are making just the minimum amount each month.
During the pandemic, consumers made significant progress in paying down credit card balances. However, as inflation accelerated, many consumers used credit cards to keep their heads above water.
“Credit card performance is showing signs of consumer stress,” the report’s authors wrote. “The share of active credit card accounts making just the minimum payment hit a 12-year high. The share of revolving card balances to total card balances is continuing its rise since the end of the pandemic. The share of delinquent balances continues to worsen year over year after surpassing pre-pandemic levels in third quarter 2023.”
Email Mark Huffman at mhuffman@consumeraffairs.com