Much to CU Groups’ Dismay, Senator Pushes Interest Cap on Credit Cards

CUNA, NAFCU hit back following proposal to cap credit card interest rates at 18%.

David Baumann


Sep 25



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David Baumann

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David Baumann

A squiggly pink arrow pointing downward and to the right.
Credit cards in a wallet.

Credit union trade groups already fighting credit card fee limits and interchange legislation now have a new foe—Sen. Josh Hawley, R-Mo.

Hawley has introduced S. 2760, legislation that would cap credit card interest rates at 18%.

“Americans are being crushed under the weight of record credit card debt—and the biggest banks are just getting richer," Hawley said, as he introduced the bill.

Credit Union Trade Group Opposition

Last week, financial services trade groups, including CUNA and NAFCU fired back.

“We uniformly oppose this legislation as it would impose government price controls on private products by creating an all-in annual percentage rate (APR) cap for credit cards at 18 percent, a move that would severely restrict the availability of this type of credit for everyday consumers and effectively harm the very people the proposed legislation seeks to protect,” the trade groups, including the American Bankers Association and the Independent Community Bankers of America wrote in a letter to Hawley.

Other Credit Card Battles

The financial services trade groups are fighting credit card battles on two other fronts.

The CFPB has proposed a rule that would limit credit card late fees to $8. In addition, a group of senators, including Sen. Richard Durbin, D-Ill., is attempting to add credit card interchange legislation, S. 1838, to a variety of bills.

Hawley’s bill also would prohibit credit unions and banks from imposing new fees in an effort to overcome the cap limit.

Hawley’s Arguments

“The government was quick to bail out the banks just this spring, but has ignored working people struggling to get ahead,” he said. “Capping the maximum credit card interest rate is fair, common-sense, and gives the working class a chance.”

He added that last year, the interest rate on many major credit cards exceeded 30%.

In opposing Hawley’s bill, the trade groups said that including annual fees and other fees in the cap, would lead to the elimination of rewards, such as “cash back.” They said that credit cards are one of the leading vehicles for expanding financial inclusion.

“Eliminating lenders’ ability to prudently price loans for the risk involved will result in access to credit cards being limited to consumers who have high income and credit scores and pose little risk to card issuers,” they wrote.

Past Attempts

Past efforts to cap credit card interest rates have failed. In 2019, progressives Sen. Bernie Sanders, I-Vt., and Alexandria Ocasio-Cortez, D-N.Y.—two lawmakers usually not associated with the conservative Hawley—sponsored legislation that would have capped the credit card interest rate at 15%.

That legislation was not passed in either House.

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