A Senate expense that would set an all-in interest rate cap for charge card at 18% would badly limit card schedule for daily customers and hurt the very individuals it looks for to secure, the American Bankers Association and 7 bank and cooperative credit union associations stated today. In a letter to expense sponsor Sen. Josh Hawley (R-Mo.), the groups revealed their opposition to the expense—the Capping Credit Card Interest Rates Act—and any effort to modify it to an unassociated short-term federal government financing expense.
“[The bill] would not only cap credit card interest rates, but would also include all associated fees, penalties, and add-on products, such as warranties, in its arbitrary ‘all-in’ APR calculation,” the associations stated. “Including annual fees and other fees in the calculation will cause credit cards to exceed the cap, resulting in the elimination or reduction of valuable credit card features like cash back and other rewards. This cap will also impede innovative credit cards with non-credit features designed to attract underserved groups because even a nominal annual fee could result in an all-in rate that exceeds the cap.”
Regulated banks that release charge card to their consumers currently secure customers and abide by various guidelines and requirements, the associations stated. The expense’s specified objective of minimizing customer financial obligation “can be achieved without creating barriers for accessing safe and affordable credit products by pushing consumers with troubled credit histories and those on the financial fringe outside of highly regulated financial products to far more costly and less regulated lenders.”