Legislators to Debate Credit Card Rate Cap
New law could cap credit card interest rates at 16%…
With the noble thought that Congress needs to protect consumers from excessively high interest rates, credit card companies and banks may soon have a new law to conform to. Rep. Louise Slaughter (D-N.Y.), Chairwoman of the House Rules Committee, with the assistance of Reps. John Tierney (D-MA) and Michael Capuano (D-MA) proposed the Renewing America’s Commitment to Consumers Act. The law would seek to “prevent the kind of dramatic rate hikes consumers - even those with strong credit histories and who have paid their balances on time - have been experiencing.” As currently written the bill would:
- Cap credit card interest rates at 16%
- Restrict excessive fees
- Cap contingency fees like late-payment and over-the-limit fees at $15.
- Limit membership or annual fees
- Bill’s provisions will not supersede any state law with a lower usury cap
This recent effort is a free-standing bill that seeks to close loopholes being used by the credit card companies. The Rules committee is expected to hold a hearing shortly before proceeding to the Financial Services Committee. If passed by the Financial Services, the bill would then proceed to Congress. “I look forward to continuing my work with Congresswoman Slaughter and Congressman Capuano to advance this bill in the House, and then press the Senate to act on it as well. The time has come for action,” concluded Tierney.
Opponents, including the American Bankers Association, argue that a government-imposed cap would restrict the credit card market and make it harder for consumers to borrow money.
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