Hawley and Sanders teaming up on a bill to manifest this campaign promise as reality.

https://www.foxnews.com/politics/bernie-sanders-josh-hawley-team-up-trump-pledge-slash-credit-card-rates-10.amp

"During the campaign, President Trump pledged to cap credit card interest rates at ten percent," Sanders said in a statement. "Today, I am proud to be introducing bipartisan legislation with Senator Hawley to do just that."

In his own statement, Hawley said, "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." "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."

10% cap for an effective duration of 5 years. I assume, after 5 years, the rate returns to a prime+ x% rate.

4 said:

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Never understood why credit card companies seemed to be immune to usury laws...

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What usury laws are you referring to?

I'm usually opposed to government interference like this, but capping the rate should mean banks would be less willing to extend credit to just anyone. So as long as there is no corresponding government interference along the lines of forcing banks to provide credit cards to people that are too risky for a 10% rate, this could be a good thing.

If Trump promised to cap profit margins for companies you liked at 10% would it get the same reaction?

This is the same thing.

They provide a service that is willingly and knowingly adopted/demanded. If there is inherently illegal behaivor happening - then stop it. But capping rates is dumb. Interest rate is equivalent to risk. You cap risk, the card companies are going to pass on millions and millions of customers who will then just go one step down to payday lenders.

You only solve the credit card problem by solving the underlying selfish desires of the folks buying things they can't afford.

Sounds good, but this is just like whack-a-mole. They'll just get their money by charging more in annual fees, late fees, processing fees, etc, etc. Sure, they'll probably cut out some lower end credit they shouldn't have been issuing in the first place, but overall this is probably a bad idea.

Rossticus said:

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This could potentially result in additional business from people with good credit and assets who need a quick $10,000 - $20,000 of credit for something. Why take out a private loan or less flexible HELOC at 7%+, plus fees, when you can put it on a card for a guaranteed 10% over 5 years?

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Are you implying that the fees are >3%?

IF I was going to even consider doing something like this this I'd float lower interest rates for low risk tiers and not a flat rate cap for everyone. 10% max for people with, say 750+ credit score and debt usage below 50%. Then 15% for 650-750. 20% for 600-650 and then no restrictions on anyone below 600. You do have to be able to account for risk and turn enough profit to avoid charging everyone other arbitrary fees.

This is a terrible idea and will not pass. ALL banks and CC issuers will charge high fees for CC issuance and aggressively charge (and not write off) any type of transactional or late fees, all other fees (cash advance, etc.) will increase as well. Credit limits will likely be severely curtailed as the bank cannot build a larger loss reserve so must limit exposure. As well, many will exit the market altogether which will tighten the availability of personal credit.

Perhaps the biggest unintended consequence would / could be an impact on credit card rewards / points plans, not sure how that would play out.


4, usury laws are set by states, not at the federal level. The reason usury laws are so high is FOR credit cards, which are meant to provide short term liquidity for larger purchases that one would normally not pay cash for. It is not intended that you pay the full interest rate when you charge $1000 to buy a TV or computer or appliance, etc., as that should be paid off in 2-4 months. So simplistic example you charge $1000 and pay it off after 3 months w/ a 20% annual rate, you have paid 5%. Anyone paying anything close to the actual CC interest rate is not using the CC appropriately or wisely.

Kenneth_2003 said:

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Rossticus said:

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This could potentially result in additional business from people with good credit and assets who need a quick $10,000 - $20,000 of credit for something. Why take out a private loan or less flexible HELOC at 7%+, plus fees, when you can put it on a card for a guaranteed 10% over 5 years?

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Are you implying that the fees are >3%?

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Average of 2-5% of the amount borrowed. Plus there's a minimum draw when you take out funds against it. It's bit less convenient than just putting it on a card. Some people would choose that convenience if they planned to pay off the amount quickly.

This is going to force a lot of people to use more shady lending practices like payday loan places. If you think interest rates are bad on credit cards...welp.

Many do not have funds saved for a small emergency. High interest credit cards suck but they help people get their cars back on the road after a breakdown or blown tire and other unexpected expenses. The people who most need to utilize a card in this way are going to be people with lower incomes who aren't going to have great credit.

aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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As it should be

Jarrin' Jay said:

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This is a terrible idea and will not pass. ALL banks and CC issuers will charge high fees for CC issuance and aggressively charge (and not write off) any type of transactional or late fees, all other fees (cash advance, etc.) will increase as well. Credit limits will likely be severely curtailed as the bank cannot build a larger loss reserve so must limit exposure. As well, many will exit the market altogether which will tighten the availability of personal credit.

Perhaps the biggest unintended consequence would / could be an impact on credit card rewards / points plans, not sure how that would play out.


4, usury laws are set by states, not at the federal level. The reason usury laws are so high is FOR credit cards, which are meant to provide short term liquidity for larger purchases that one would normally not pay cash for. It is not intended that you pay the full interest rate when you charge $1000 to buy a TV or computer or appliance, etc., as that should be paid off in 2-4 months. So simplistic example you charge $1000 and pay it off after 3 months w/ a 20% annual rate, you have paid 5%. Anyone paying anything close to the actual CC interest rate is not using the CC appropriately or wisely.

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Yep. Unfortunately the people that act this way are also those who insist minimum wage should "support a family of four"

Rossticus said:

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IF I was going to even consider doing something like this this I'd float lower interest rates for low risk tiers and not a flat rate cap for everyone. 10% max for people with, say 750+ credit score and debt usage below 50%. Then 15% for 650-750. 20% for 600-650 and then no restrictions on anyone below 600. You do have to be able to account for risk and turn enough profit to avoid charging everyone other arbitrary fees.

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This is how it should be done. Higher risks should command a higher rate and once they improve their credit score the rate should automatically adjust.

aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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Good. It's the people that do pay their bills that are paying for losses. People need to be smart with their money.

AtticusMatlock said:

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This is going to force a lot of people to use more shady lending practices like payday loan places. If you think interest rates are bad on credit cards...welp.

Many do not have funds saved for a small emergency. High interest credit cards suck but they help people get their cars back on the road after a breakdown or blown tire and other unexpected expenses. The people who most need to utilize a card in this way are going to be people with lower incomes who aren't going to have great credit.

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Honestly, there are a ton of cards with regular introductory and rotating 0% apr promotions for both purchases and balance transfers as long as long as you have decent credit. If you manage your credit accounts intelligently you'll pay very little in interest and fees even if it takes you a few years to pay off your accounts.

TxAggieBand85 said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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As it should be

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Why should the government be able to tell you who you can loan money to?

Funky Winkerbean said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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Good. It's the people that do pay their bills that are paying for losses. People need to be smart with their money.

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Unless you are carrying a balance you aren't paying for anyone's losses with a credit card.

Teslag said:

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TxAggieBand85 said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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As it should be

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Why should the government be able to tell you who you can loan money to?

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Where does the government do that?

Some cards already offer things similar to this. If I needed to, I could take a personal loan directly from my Citi credit card account without having to apply and no credit check, up to my credit limit for a set interest rate over a specific period of time. I think the last time I looked I could get something like 7.99% for up to 24 months and slightly higher for longer time frames.

I agree with you on that. The problem is the people they are trying to help with these lower interest rates are the people who would be completely cut off from credit at all if this bill were to pass, and ultimately would be hurt by it.

Funky Winkerbean said:

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Teslag said:

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TxAggieBand85 said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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As it should be

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Why should the government be able to tell you who you can loan money to?

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Where does the government do that?

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He resonded to a poster stating that government action would result in people simply not being able to get credit cards anymore. He said "as it should be". Ergo, he supports government action to prevent people getting credit cards.

If he doesnt' think people should get cards that's one thing, but this thread is about it being the result of government policy.

It is simple and the answer is to get the government entirely out of the credit card business.

And just about every other kind of business also.

Except for basic government functions like national defense, building highways, etc., whatever they touch they screw up.

aTm2004 said:

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The CC companies will make up the lost revenue by limiting or eliminating cards with no annual fee.

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This may happen.
I always get no annual fee cards and pay off every month. They make no money from people like myself.

They make their revenues from the dolts who run up bills and don't pay and accumulate large amounts of debt.

MemphisAg1 said:

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Government needs to stay out of business contracts.

No one forces somebody to run up a balance on a card.

Cap it at 10% and a lot of people will lose access to credit, plus the banks will make up for it with fee increases elsewhere. Meaning responsible people will "socialize" the cost of other people's bad choices.

If people want to do stupid, that's on them.

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I agree. As long as they don't go on welfare and make me pay for their stupidity.

TxAggieBand85 said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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As it should be

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The credit card companies should be able to offer a 10000% interest credit card if they wanted, and then eat the risk of the people defaulting.