The two millennial lawmakers are unlikely to become allies on laws that limit credit card interest rates to 10%. This is the policy President Trump previously pitched on the 2024 campaign trail.
Anna Paulina Luna Rep. (R-FLA.), 35, and Alexandria Ocasio-Cortez (D-NY) (D-NY), 35, found themselves on the other side of the matter, and announced the law on Friday, quickly halting credit card rates from above 10%.
“For too long, credit card companies have abused working-class Americans at absurd rates and locked them in almost insurmountable amounts of debt,” Lunda said in a statement.
“We need a fair solution. That means removing the status quo and setting a reasonable cap on interest rates.”
Officer Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.) It was introduced Last month's CAP Act. Ocasio-Cortez has I'm involved It includes the 2019 bill that has had similar laws in the past and aims to limit interest rates to a maximum of 15%.
“Credit cards with high interest rates lock people who work regularly into an endless debt cycle,” she argued. “When families struggle to achieve their goals, we cannot allow big banks to shake our community for profit.”
The current average is almost three times the proposed limit. At 28.71%, According to Forbes.
Interest rates have skyrocketed from around 15% during the red-heat inflation spurred by the Covid-19 pandemic and stimulus, and have been rising ever since.
According to the Fed, credit card interest rates have never dropped to 10%. This dataset dates back to 1994. The closest was during the Great Recession in 2008, when interest rates fell to about 11.88%.
Critics argue that artificial caps on credit card interest rates will lead to significant economic impacts, prompting credit card companies to stop giving credit to millions of families.
“Government interventions that govern the terms of highly popular unsecured credit products are likely to completely limit or eliminate the availability of this type of short-term revolving credit line for millions of Americans who rely on this resource,” said the American Bankers Association and 52 State Bank Group Groups. I wrote it in a letter To Sanders and Holy.
The group cited examples Oregon Chile has similar policies in place. They pointed to research suggesting that access to credit has decreased.
“The evidence is clear. Price controls such as interest rate caps, harm consumers. Laws that prevent lenders from claiming market rates of return lead to less lending,” they argued.
AOC and Luna noted that the Fed's benchmark interest rate, with commercial bank lending and borrowing rooms between 4.25% and 4.50%, is dramatically lower than credit card rates.
The AOC, who is responsible for part of the Bronx and Queens, stressed that Trump has pushed a 10% credit card rate cap.
“We're going to put a temporary cap on credit card rates while working Americans are catching up,” Trump told Crows in September. “We close it with about 10%. We can't make 25% and 30%.”
Economics and finance experts have overwhelmed the proposal.
“There are some good academic tasks in which interest rate caps lead to credit card distribution,” says Arpit Gupta, Associate Professor of Finance at New York University. I said. “What we don't know is whether this may actually be good for some low credit score borrowers with traps of conducting debt.”
“Policies like this make sense, but almost certainly lead to credit rationing that low-income borrowers can't get credit at all,” said C. Kirabo Jackson, an economist at Northwestern University. “The 30% cap is beneficial, but 10 is too low. To be clear, this is not just a hot take, research shows this.”
So far, legislation does not seem to have much traction in either Congress. Now that Trump has returned to the White House, it is unclear whether Trump will push his hat forward.
