A new analysis by Unleash Prosperity warns that a proposed 10% credit card interest rate cap would significantly reduce access to credit for well over 100 million American cardholders, with the most severe impact on consumers with lower credit scores and incomes [1]. The report, cited by FOX Business, highlights bipartisan support among Republican and Democratic lawmakers for capping credit card interest rates at 10%, with additional proposals suggesting caps at 15% or 20%. The Trump administration has also expressed support for such measures [1].
According to a large survey published by the American Bankers Association in January, 74% to 85% of open credit card accounts would be closed or have credit lines reduced if a 10% cap were implemented, affecting between 137 million and 159 million cardholders [1]. The analysis found that subprime borrowers would be universally affected, as financial institutions would not be able to cover lending costs under the cap. Between 71% and 84% of prime borrowers would either lose access to credit cards or see their credit lines reduced [1].
Super-prime borrowers, with credit scores above 780, would also be impacted by a 10% or even a 15% rate cap, as their current average interest rates range from 13% to 18% for existing accounts and 17% to 21% for new accounts [1]. The analysis suggests that credit card rewards programs could be curtailed or eliminated altogether as a result of these caps [1].
Steve Moore, co-founder of Unleash Prosperity and a former Trump administration economist, stated that the caps would function as price controls in a highly competitive market, leading to fewer Americans with lower incomes or credit scores having access to credit cards, ultimately making them worse off [1]. The report also notes that a 20% interest rate cap would affect about 70% to 75% of all borrowers [1].
CONCLUSION
The proposed credit card interest rate caps, particularly at 10%, could dramatically reduce access to credit for millions of Americans, especially those with lower credit scores. Analysts warn that such measures would have widespread negative consequences for consumers and the economy, with potential curtailment of rewards programs and reduced affordability. The market impact is expected to be high if these caps are implemented.