Senator Josh Hawley (R., Mo.) introduced new legislation on Tuesday to cap record-high credit card interest rates in order to provide financial relief to credit card holders and offset some debt.
The Capping Credit Card Interest Rates Act, if passed, would cap the annual percentage rate for credit cards at 18 percent, prevent credit card companies from creating new fees to evade the cap, and impose penalties on credit card companies for violating the cap.
“Americans are being crushed under the weight of record credit card debt—and the biggest banks are just getting richer,” Hawley said in a press release issued from his office. “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.”
This is by far Hawley’s most aggressive action taken toward all-time-high interest rates and the national credit card debt. The Missouri senator has previously been outspoken on the practices of major credit card companies, particularly related to their tracking of gun-related purchases last year.
Speaking with the New York Post, a spokesperson for the American Bankers Association, the lobby representing the nation’s banks, criticized Hawley’s introduced legislation.
“Price controls don’t work and the mischaracterization of deposit insurance coverage — which banks themselves pay for — doesn’t justify this type of harmful government intervention,” the spokesperson said. “This proposal would harm consumers by restricting access to credit for those who need it the most and driving them toward less regulated, more costly alternatives.”
The proposed bill comes as cumulative consumer credit card debt totaled more than $1 trillion in the second fiscal 2023 quarter. Additionally, the average credit card interest rate sits at a record 24 percent as of September.
In April, large banking companies JPMorgan Chase, Citigroup, and Wells Fargo escaped the crisis that plagued the industry by earning bumper profits, which are increased profits gained from charging more for loans. A month prior, the Silicon Valley Bank and Signature Bank of New York made headlines when both collapsed, putting the U.S. economy in a tough position.
The Biden administration’s Federal Deposit Insurance Corporation bailed out the depositors who invested money in the impacted banks, although the president didn’t characterize the federal government’s crisis response as a bailout at the time.