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Some lawmakers and regulators are calling for interest rate caps and lower fees on credit cards as debt levels march higher.
Total credit card debt topped $1 trillion in the second quarter of 2023 for the first time ever.
The average interest rate for all cardholders jumped to more than 21% in August, the highest on record, according to Federal Reserve data. Some cards — retail store cards, in particular — charge more than 30%, said Ted Rossman, industry analyst for CreditCards.com.
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Sen. Josh Hawley, R-Mo., introduced a bill in September to cap credit card rates — also known as the annual percentage rate, or APR — at 18%, citing “higher financial burdens” shouldered by working people.
The legislation, the Capping Credit Card Interest Rates Act, would also aim to prevent card companies from raising other fees to evade a cap.
Meanwhile, the Consumer Financial Protection Bureau proposed a rule earlier this year to slash fees for late credit card payments. One prong of the rule would lower fees for a missed payment to $8 from as much as $41.
In June, four senators — Sens. Richard Durbin, D-Ill.; Roger Marshall, R-Kan.; J.D. Vance, R-Ohio; and Peter Welch, D-Vt. — introduced the Credit Card Competition Act. That act aims to reduce merchant card transaction fees that may get passed on to consumers.
“I think some of the [political] lines are starting to blur a little bit, at least on credit card issues,” Rossman said.
However, it’s unclear if these measures will succeed.
For example, Democrats are “likely to embrace” Hawley’s bill since progressives have long favored a federal interest rate cap, Jaret Seiberg, analyst at Cowen Washington Research Group, wrote in a recent research note. But it likely doesn’t have enough support to…
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