The president-elect recently proposed imposing a 10 percent temporary cap on credit card rates.
Sen. Bernie Sanders (I-Vt.) has said he is open to working with President-elect Donald Trump and the incoming administration on capping credit card interest rates.
Trump recently proposed implementing 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 collaborating with the president-elect and his team on limiting credit card interest fees.
“I look forward to working with the Trump Administration on fulfilling his promise to cap credit card interest rates at 10 [percent],” the senator wrote in a Nov. 15 post on social media platform X. “We cannot continue to allow big banks to make record profits by ripping off Americans by charging them 25 to 30 [percent] interest rates. That is usury.”
In 2019, Sanders teamed up with Rep. Alexandria Ocasio-Cortez (D-N.Y.) on 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,” he said at the time. “They wear three-piece suits and work on Wall Street, where they make hundreds of millions in total compensation.”
Bankrate analysts say the decision could benefit half of credit card holders carrying debt from month to month. However, it would affect 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.
“The government was quick to bail out the banks just this spring, but has ignored working people struggling to get ahead. Capping the maximum credit card interest rate is fair, common-sense, and gives the working class a chance.”
A group of Democrat senators, led by Sen. Elizabeth Warren (D-Mass.), released a bill that restored states’ rights to regulate consumer loan interest rates.
The current administration has also grappled with the credit card companies.
President Joe Biden first 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 restrict these companies from charging clients late fees higher than $8.
Financial experts anticipate gradually declining credit card interest rates because the Federal Reserve is unwinding its restrictive monetary policy stance. The Fed followed through on a quarter-point reduction to the benchmark federal funds rate to a range of 4.5 to 4.75 percent.
But although credit card interest rates are expected to fall in the coming months, they remain high because they have been 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 rose 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.