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Issue

Interest Rate Caps

Interest rate caps may sound appealing, but in reality they can limit access to credit and harm the economy.

Proposed Rate Cap Puts Credit Access at Risk

Up to 85% of credit card accounts could be closed or see sharply reduced limits under a 10% federal rate cap. Read the analysis and see how a 10% cap would affect credit card holders in your state, below.

ABA Position

Economic research has consistently shown that interest rate caps on credit cards and bank loans make consumers and economies worse off. When imposed on highly-regulated lenders like banks, interest rate caps reduce access to those credit products which carry the most consumer protections.

Because arbitrary caps do not reduce demand for funds by consumers and businesses, borrowers are forced to seek the services of payday lenders and other less-regulated sources of loans, including the black market. Banks are already subject to more effective forms of regulation than rate caps, such as being required to evaluate the ability of consumers to repay a loan before credit is extended.

The ability of banks to offer credit products across state lines has created a competitive, national market with enhanced regulatory supervision. This movement away from a patchwork of inconsistent and vague state laws is progress towards giving consumers more options, no matter where they live. Attempts to undermine this national market would be a step backwards and result in less competition.
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Tell your lawmakers: oppose the 10% credit card interest rate cap.

Up to 159 million consumers will be unable to use their credit cards if Congress advances a 10% credit card interest rate cap.

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New Analysis Shows How a Credit Card Interest Rate Cap Will Harm Consumers

New data from credit card issuers accounting for roughly 75% of the market shows that a proposed 10% federal credit card interest rate cap would mean up to 85% of open credit card accounts nationwide would be closed or have their credit lines drastically reduced, including up to 84% of borrowers with credit scores over 600. In other words, up to 159 million consumers would no longer be able to use their cards.

Read the Analysis

See the Impact in Your State

Type or select your state.

Learn how people in your state would be affected by a 10% interest rate cap.

51 options available.
 

ABA Resources

In Depth

Our Experts

Thomas J. Rosenkoetter

Tom Rosenkoetter

SVP, Executive Director, Card Policy Council

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Sarah Grano

(202) 663-5470

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