One Big Thing:
Capping credit card interest rates may sound consumer-friendly, but it would reduce access to credit for millions of Americans and create economic harm that ripples far beyond cardholders.
Why it matters:
Credit cards are a foundational part of the U.S. economy. Limiting access to them doesn’t just affect consumers — it impacts small businesses, local communities, and overall economic growth.
The big picture:
Credit cards allow consumers to pay instantly, anywhere in the world, based on a promise to pay later — often with a full month to repay purchases interest-free. That system fuels roughly $3.6 trillion in consumer spending each year, supporting local businesses, national retailers, and the broader U.S. economy.
For many Americans, credit cards are effectively free. Millions never pay interest and still earn rewards like cash back, travel, or hotel points. For others, credit cards serve a critical role as a financial safety net when emergencies arise — from medical bills to car repairs or temporary income disruptions.
What’s often missed:
The credit card system carries real risk. Some consumers fall behind or default. Fraud remains a constant threat, with criminals exploiting stolen cards for illicit purposes. These costs are built into the system and absorbed through a balance of interest rates and fees that allow credit to remain widely available.
The problem with rate caps:
A government-imposed rate cap — even one with good intentions — limits the system’s ability to absorb risk. When lenders can’t price for risk, they don’t lower costs; they restrict access to credit instead.
A proposed 10 percent rate cap would effectively eliminate credit cards as an option for millions of Americans. Many would be pushed toward less-regulated, higher-cost alternatives just to cover basic monthly expenses.
Who gets hurt:
This wouldn’t only affect the most vulnerable. At least 70 percent of Americans with credit scores over 600 would also lose access to credit under a strict rate cap.
When access to credit shrinks at that scale, consumer spending drops. Small businesses feel it first. Local communities follow — and eventually, the national economy takes a hit.
History lesson:
Rate caps have never worked. They consistently create shortages and often punish the very people they are intended to protect through higher prices, fewer choices, and reduced access to safe, regulated credit.
Bottom line:
A credit card rate cap may sound helpful, but in practice, it would harm American families, small businesses, and the economy as a whole. Policymakers should focus on preserving responsible access to credit — not taking options away.