National Trade Groups Oppose Credit Card Fees and Interest Cap

A proposed bill to establish a nationwide cap on fees and interest on credit cards and consumer loans would have a devastating effect on access to credit for individuals and small-business owners, a group of national banking trade associations said in a joint letter. The Protecting Consumers from Unreasonable Credit Rates Act (S. 2781) would impose a national “fee and interest rate” cap of 36%. The legislation is sponsored by Senator Dick Durbin (D-IL).

In their letter to the sponsors, the associations said that studies show that even modest government price controls raise costs rather than lower them. “This legislation, while intended to help consumers, will actually reduce access to credit for millions of consumers, particularly subprime borrowers who rely on affordable small-dollar loans, credit cards, and other depository institution products for short-term financing needs,” the associations said. “Fee and interest rate caps will also discourage development of innovative products, especially those designed for the underserved market.”