WASHINGTON, D.C. – As millions of working class families struggle to afford the high prices of groceries, gas, rent and other basic necessities, Sen. Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.) introduced bipartisan legislation to cap credit card interest rates at 10%.
During the campaign, President Trump pledged to cap credit card interest rates at 10%.
Today, I am proud to be introducing bipartisan legislation with Senator Hawley to do just that. When large financial institutions charge over 25% interest on credit cards, they are not engaged in the business of making credit available. They are engaged in extortion and loan sharking. We cannot continue to allow big banks to make huge profits ripping off the American people. This legislation will provide working families struggling to pay their bills with desperately needed financial relief.
“Working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon. It’s not just wrong, it’s exploitative. And it needs to end,” said Hawley. “Capping credit card interest rates at 10%, just like President Trump campaigned on, is a simple way to provide meaningful relief to working people. Let’s do it.”
In September, the Trump campaign said, “President Trump has promised to cap interest rates at 10% to provide temporary and immediate relief for hardworking Americans who are struggling to make ends meet and cannot afford hefty interest payments on top of the skyrocketing costs of mortgages, rent, groceries and gas.”
The Sanders-Hawley bill would immediately cap credit card interest rates at 10 percent. The legislation would be in effect for five years.
This bipartisan bill comes after a recent Forbes report found that the average credit card interest rate is 28.6%, even though banks are able to borrow money from the Federal Reserve at less than 4.5%.
In 2022, credit card companies generated $130 billion in interest and fees. Today, the American people hold a record-breaking $1.17 trillion in credit card debt. As of 2023, the average household with credit card debt has over $21,000 in credit card debt. The delinquency rate of credit cards issued by commercial banks is around 3.23%, the highest rate since 2011 in the wake of the Global Financial Crisis.
If a consumer has a $5,000 credit card balance with a 28% interest rate and can only afford to make the minimum payment of $166 a month it would take that person over 24 years to pay off and would cost nearly $11,000 in interest. If credit card interest rates were capped to 10%, that same consumer would save over $7,000 in interest.
Usurious credit card interest rates and sky-high fees have allowed credit card companies to make enormous profits and pay their executives exorbitant compensation packages.
Over the past five years Visa made $67.5 billion in profits and paid its Executive Chair and former CEO Alfred F. Kelly, Jr., nearly $140 million in total compensation; Mastercard made $44.3 billion in profits and paid its CEO Michael Miebach $77.7 million in total compensation and American Express made $33.8 billion in profits, and paid its CEO Stephen Squeri $157.2 million in total compensation.
If these two seemingly elected leaders truly believe they have participated in enabling corporate financiers to engage in “extortion,” I ask why they only propose reducing the crime instead of boldly taking a claim to the third branch of the separated powers to uphold all constitutionally protected Rights intended in the declaration of 1776;