Bernie Sanders Shows Willingness to Collaborate with Trump on Limiting Credit Card Interest Rates
The president-elect recently proposed implementing a 10 percent temporary cap on credit card rates.
Sen. Bernie Sanders (I-Vt.) is open to collaborating with President-elect Donald Trump and the incoming administration on capping credit card interest rates.
Trump recently proposed imposing a 10 percent temporary cap on credit card rates.
“While working Americans catch up, we’re going to put a temporary cap on credit card interest rates,” Trump said at a Long Island rally on Sept. 18. “We’re going to cap it at around 10 percent. We can’t let them make 25 and 30 percent.”
The policy would likely require congressional action.
Sanders, who recently secured another term in the upper chamber, said he looks forward to working with the president-elect and his team on limiting credit card interest fees, calling current rates “usury.”
“I look forward to collaborating with the Trump Administration on fulfilling his promise to cap credit card interest rates at 10%,” the senator said in a Nov. 15 post. “We cannot continue to allow big banks to make record profits by ripping off Americans by charging them 25 to 30% interest rates.”
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This is not the first time that Sanders has addressed the issue.
In 2019, Sanders joined forces with Rep. Alexandria Ocasio-Cortez to introduce a plan to cap credit card rates at 15 percent.
“The reality is that today’s modern-day loan sharks are no longer lurking on street corners breaking kneecaps to collect their payments,” said the Vermont independent at the time. “They wear three-piece suits and work on Wall Street, where they make hundreds of millions in total compensation.”
Bankrate analysts state that the decision could benefit half of credit card holders carrying debt from month to month. However, it would impact card issuers’ profit margins “and would almost surely cause substantial cutbacks in access to credit and rewards.”
The banking industry has also opposed previous rate cap proposals.
A spokesperson for the American Bankers Association told The Epoch Times shortly after Trump’s announcement that these measures “would result in the loss of credit for the very consumers who need it most” and push consumers to alternative lending instruments that are less regulated and riskier.
However, lawmakers on both sides of the aisle have advocated reining in the industry’s practices.
Sen. Josh Hawley (R-Mo.) suggested capping rates at 18 percent as part of legislative efforts in September 2023.
“Americans are being crushed under the weight of record credit card debt—and the biggest banks are just getting richer,” Sen. Hawley said in a statement last year.
A group of Democrat senators, led by Sen. Elizabeth Warren (D-Mass.), released a legislation that restored states’ rights to regulate consumer loan interest rates.
The current administration has also dealt with the credit card companies.
President Joe Biden initially proposed a rule in February 2023 to cap credit card late fees at $8. However, a federal judge in Texas blocked the White House’s measure to limit these companies from charging clients late fees higher than $8.
Financial experts expect credit card interest rates to gradually decrease as the Federal Reserve is moving away from its restrictive monetary policy stance. The Fed implemented a quarter-point reduction to the benchmark federal funds rate to a range of 4.5 and 4.75 percent.
But while credit card interest rates are anticipated to fall in the upcoming months, they are still high due to being near historic levels since early 2022.
According to the U.S. central bank’s consumer credit data, the average credit card rate is nearly 22 percent.
In a quarterly study, New York Fed economists reported that credit card debt increased by $24 billion to a record $1.17 trillion in the third quarter.
A recent WalletHub survey found that 51 percent of U.S. households struggle with credit card debt.
