Two Senators Want to Cap Credit-Card Rates at 10%. Banks Say That Would Cut Credit Access

Key Takeaways Senators Bernie Sanders and Josh Hawley introduced a bill last week that would cap credit card interest rates at 10%.

Banks said a cap that low would significantly decrease the number of people it could issue credit cards to.

Analysts said the bill has little chance of passing, though the proposal formalizes one of President Trump's campaign promises.

A bipartisan pair of senators want to cap your credit card interest at less than half the typical rate. They may have President Donald Trump's support—but banks aren't so excited.

The industry is fighting a bill written by Republican Sen. Josh Hawley, R-Missouri, and Democratic Sen. Bernie Sanders, I-Vermont, that would temporarily cap rates at 10%. That's far lower than the current average APR of 24.37% calculated by Investopedia. Industry groups call the proposal a price control that would “severely restrict the availability” of credit cards for consumers.

Analysts say the bill has little chance of passing. However, it effectively formalizes a proposal that Trump floated on the campaign trail at a time when U.S. credit card debt is mounting.

Authors Say Cap Would Give Americans Relief. Issuers Say It Would Restrict Credit

The pair of senators announced the bill last week. They want the cap in place for five years.

“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,” Hawley said in a news release. “It’s not just wrong, it’s exploitative.”

Sanders, meanwhile, said credit card companies are making “huge profits ripping off the American people.”

Trade groups, including the Consumer Bankers Association, America’s Credit Unions, and the American Financial Services Association, wrote a letter to Sanders and Hawley arguing their bill would force issuers to restrict access to credit cards because offering them at 10% APR would prompt lenders to lose money. Without credit cards, millions of consumers would turn to credit options that are “far more costly and less regulated,” the groups wrote.

Credit card debt totaled $1.17 trillion in the third quarter of 2024, according to the most recent data available from the New York Federal Reserve Bank. That's 33% higher than the third quarter of 2019, before the pandemic.

There’s 'Simply No Viable Path' For Cap

The likelihood of the bill passing is “very, very small,” Ian Katz, a financial policy analyst at Capital Alpha Partners, wrote in a recent note to clients.

Past measures have failed to gain traction, he wrote, noting Hawley’s proposal for an 18% rate cap in 2023, Sanders’ 15% rate cap bill in 2019, and a 36% rate cap offered by Sen. Jack Reed, a Rhode Island Democrat. The new bill, with an even lower cap than those previously proposed, would “raise questions about how many card issuers would want to be in that business,” Katz wrote.

Trump, who had floated a temporary 10% rate cap last year, remains a “wild card” if he returns to the idea and forces Republicans to take a closer look, Katz wrote.

"While working Americans catch up, we're going to put a temporary cap on credit card interest rates," Trump said at a campaign rally in September. "We're going to cap it at about 10%. We can't let them make 25% and 30%."

“There is little about Washington we can be sure about right now, but we can say this with emphatic certainty: this bill will not become law,” Isaac Boltansky, a policy analyst at BTIG, wrote in a note to clients.