Predatory credit card practices are drowning millions of Americans in debt and bankruptcy, in a regressive system where those who are the least able to pay are charged the highest interest rates and minimum payments. I have personally experienced and even today still am experiencing this myself along with so many of you, so many other Americans.
I don’t know about you, but nearly 30% interest comes off as almost criminally exploitative to me. And that isn’t even the limit: in most cases, there is no limit. Currently, Americans are facing record-high credit card interest rates. The year 2022 saw a record $130 billion in credit card interest and fees charged to consumers and the amount of credit card debt hit an all-time high in the last quarter of 2023, some $1.05 trillion. Some of the worst offenders are large, corporate banks that are hardly struggling. And this burden is hitting lower- and middle-income Americans the most, who are given the highest rates and are trapped in many cases from being able to pay off their debt, as those most exploited by credit card issuers and charged the highest interest are those least able to pay them.
Even 20% is still pretty damn high. That rate still allows banks to make plenty of profits while being a third less than a very common interest rate today of 29.99%, which is far too high. As a candidate for U.S. Senate for the great state of Maryland, I am officially proposing a federal limit on all credit cards: interest must be less than 20%, including penalty APR. And I will introduce this bill on the floor soon after taking office.
If one of the consequences for this is that people who are enjoying lower interest rates that are much more reasonable see an increase to offset the limits on interest for poorer lenders, a few thoughts on that: those people are doing much better and can be a lot more selective, they will be better able to choose alternatives, the market rewarding companies that are fairer on interest rates, and if those who are better off end up paying more in interest, I would much rather have that be the case than the poorest and those who are struggling being exploited and slapped with interest rates in excess of 20%.
And another rule I will make is that any increase in interest and in the minimum payment amount or any reductions in a credit line must be notified in advance to the consumer at least four billing cycles ahead. This will prevent greedy, sneaky companies from throwing consumers into a lurch and lower the levels of bankruptcy and hardship among working and struggling Americans.
I am calling this proposal the Credit Card Interest and Changes Fairness Act and I believe it can get enough support to pass Congress and become law.