Sen. Josh Hawley Proposes Legislation to Cap Credit Card Interest Rates at 18%
Last week, Senator Josh Hawley (R-Mo.) introduced legislation that would cap the maximum interest rate credit cards could charge annually at 18 percent. By comparison, the average credit card APR is currently estimated to be around 24 percent. The Federal Reserve Bank of New York recently reported that national household credit card debt hit a record $1 trillion.
“Americans are being crushed under the weight of record credit card debt—and the biggest banks are just getting richer,” Hawley said in a press release announcing the legislation. He referenced recent liquidations of the Silicon Valley Bank of California and Signature Bank of New York, stating that the “government was quick to bail out banks just this spring, but has ignored working people struggling to get ahead.”
Democrats have tried for decades to limit credit card interest rates, most recently in 2019, when Senator Bernie Sanders (D-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) introduced the Loan Shark Prevention Act to cap APRs at 15 percent. The Biden administration has also attempted to slash credit card late fees.
“We have a long history in this country of statutes, at the state and a federal level, that prevent what we used to call usury—an old-fashioned word for ripping off working people,” Hawley said, as reported by Real Clear Politics. In recent years, he has tried to build a new identity for the GOP as the blue-collar party, an identity that includes addressing “the challenges that working people face.”
Former Senator Pat Toomey (R-Penn.) has argued against rate caps, warning that they trigger “huge unintended consequences, which inevitably harm the people they are supposed to protect.” He also argued that lowering rates would make consumers most in need lose access to credit altogether.
Despite opposition from Republican lawmakers, Hawley noted that the National Credit Union Association has maintained APR at 18 percent for its members. He stated that his proposal wouldn’t favor one area of the credit card market over another.