I look forward to this in action. Although I don’t have credit card balances I am excited the American Consumer will have more spending power since they wont be paying so much for credit… unless of course credit availability dries up. chevron-right WASHINGTON (TNND) — Sen. Bernie Sanders, I-Vt., said Tuesday he will introduce legislation to limit credit card interest rates to 10%, noting President-elect Donald Trump made a similar promise on the campaign trail. The lawmaker posted on social media platform X that he hopes Trump “keeps his word” to cap the rates. “On the campaign trail, Donald Trump stood up and said he would cap credit card interest rates at 10%. You know what? That's a good idea,” Sen. Sanders wrote. “I'm going to introduce legislation to do exactly that." "I sincerely hope that Trump keeps his word," he added. The Folly of Capping Credit Card Interest Rates
They will have less credit because a lot more people are going to get their CC applications denied. Or they are going to charge merchants more per transaction to make up the difference and prices will go up.
The banks are going to make up for that lost revenue somewhere. One place would be to start charging annual fees on every card. I do not carry balances on my credit cards and I'm not going to be happy if I have to start paying annual fees on all of them. Right now I pay an annual fee on only one card, AmEx Gold, and that is because the benefits justify that cost.
It’s completely asinine. If we want to impose an arbitrary cap (aka price controls), it should at least be on the fringe of what would be considered “predatory”? How many sane people view 11% as a predatory? That’s barely above prime. So all this means is banks won’t extend credit to people with only slightly lower than prime credit. Govt should stay out of the business of price controls. I’d be more ok if it was just strictly aimed at actual predatory lenders and payday lenders, whose rates approach 400%. Some of those guys are more like criminals, so even if govt “price controls” them out of existence no real value is lost to society. I view this kind of like minimum wage, the govt should only regulate disclosures and maybe the extreme end of rates. So for a credit card that would probably be something around 30%. Govt can require more clear disclosure and maybe better arbitration/refinancing terms when people get in trouble, but to slap price controls at a ridiculously low rate will just limit credit. It’s literally just math. The commies and right wing populists never seem to get that.
I used to invest in loans through a company called "lending club", and there was another version of that called "prosper" ... It wasn't great. They offered rates as high as 28% to people with bad credit, and I got to see first hand that the default rate was through the roof, such that it was barely profitable in the long run. I made around 6% after all the defaults, which isn't terrible, but IMO, if rates were capped at 10%, it probably would have been a money loser by the same model. They'd have to change their model to giving loans only to people with the highest scores. That company stopped allowing the public to participate in funding loans and went to an institutional investor only model.
I used to use prosper and probably made closer to 9% or so. Would like to continue but it is no longer allowed in Maryland.
The financially vulnerable will get hammered & their rates will go up as they will be forced to seek even worse rates elsewhere. Idiocy.
They will get paid. Super easy to up processing fees. Shoot there are a lot of businesses that are paying far more than they need. Every couple of years I have to threaten to switch. It’s like cable. Here is your rate and they up a year or two later. In our industry the goal is 2%. Not worth my trouble if I am there. If it nudges up. I make a a phone call and it gets adjusted back typically. Kind of over BOA and may switch this year just to do it. But the company I would go to is fair and last time told me to stay as it would be a wash and the hassle to switch was up to me. If you own a business make sure you are interchange plus and not on a tier plan. I learned that our first year of business back in 2008.
Don't we already have usury laws which cap rates of interest? Do credit cards not currently fall under those, or is there carveout?
As I understand usuary laws are state level and are basically useless because credit companies just incorporate in states where they are very high and states cant regulate interstate trade. That is Uncle Sam. However, its been a long time since I stayed in a Holiday Inn Express so I cant claim expertise.
Why don't we just cap the price of eggs at $1/carton of 12 as well? And, gas at $1.50/gallon! Yes - it's a dumb idea whether from Trump and/or Sanders. See what rent control has done for cities who implement it.
I always find it fascinating that people (OP) cheer on caps for voluntary and willingly participating consumers ( read nobody forced you to fill out the CapOne application) but want unlimited ability for a government entity to require compulsory participation though the threat of jail time for citizens to participate in endless string of government boondoggles.
