Sen. Josh Hawley (R-MO) argued this week that credit card companies should cap the interest rate charged in repaying their loans. The senator’s new bill on the subject comes during both high inflation and a recent peak of more than $1 trillion in credit card debt.
The Capping Credit Card Interest Rates Act would limit the annual percentage rate (APR) charged by credit cards to 18%. The bill would also bar companies from issuing new fees to make up for the revenue shortfall. Credit card companies that violate the cap would face federal penalties.
Hawley said that Americans “are being crushed under the weight of record credit card debt—and the biggest banks are just getting richer.” He further argued that the federal government bailed out a number of failing banks earlier this year “but has ignored working people struggling to get ahead.”
“Capping the maximum credit card interest rate is fair, common-sense, and gives the working class a chance,” he said.
The senator cited the fact that some credit cards charge more than 30% in interest, while his office argues that “the biggest banks are booking bumper profits and wielding immense power over the market.”
Sen. Josh Hawley Proposes 18% Credit Card Interest Rate Cap https://t.co/sg45OO7hVA
— Tom Bevan (@TomBevanRCP) September 11, 2023
Currently, the average interest rate on credit cards is more than 24%, the highest rate in recent history.
Hawley said that people are “drowning in credit card debt and that $1 trillion mark is an all-time record.”
He added that “thanks to Joe Biden, more and more people are having to use their credit cards to pay for basic expenses, gas, monthly rent, they just can’t afford it month-to-month out of pocket and so if you miss a payment, you’re in big, big trouble.”
The senator said that he is not convinced that “these credit cards need to make more than 18% profit in order to be making plenty of cash. So they’re doing great right now, they’re making money hand over fist, they’re really making gobs of money off people’s misery.”
The Missouri Republican’s plan may not be supported by all within his party. Conservative economists generally argue that such caps do not lower overall payments and that price caps such as those seen in the 1970s tend to lead to shortages.