WASHINGTON--America’s Credit Unions Sunday sent a letter to President Trump responding to his proposal for a one-year 10% cap on credit card interest rates.
While credit unions share the President’s goal of improving affordability for American families, the letter outlines why a flat 10% cap would likely reduce access to credit for millions of consumers, particularly borrowers with imperfect or subprime credit, and could push many into worse financial outcomes.
The letter notes that credit unions already lead on affordability, offering consistently lower credit card rates than large banks and operating under existing statutory rate caps, while warning that an arbitrary government-imposed cap could force lenders to cut credit lines or exit higher-risk markets altogether."
For many Americans, a credit card is a vital lifeline when unexpected expenses hit. As you have highlighted in your campaign, too many families live paycheck to paycheck," Simpson wrote. "The Federal Reserve’s data shows that 37% of Americans would struggle to cover a $400 emergency expense from their income or savings alone. Crucially, of those households, over 40% said they would cover a $400 emergency by borrowing on a credit card...The overwhelming evidence points to the conclusion that a 10% cap would inadvertently drive vulnerable consumers toward predatory alternatives, pawn shops,loan sharks, or payday lenders that charge exorbitant fees and triple-digit interest rates."