Credit Card Fees
Cutting off access to credit will only worsen the affordability crisis
A cap on credit card rates will ultimately hurt American households and small businesses. Rate caps harm the consumers their proponents are most trying to support.
Rate caps limit the ability of card issuers to extend credit, which would force customers to borrow from significantly riskier, less-regulated creditors and face a never-ending cycle of debt. That's why, despite numerous bills proposing rate caps over the years, policymakers on both sides of the aisle have never passed a bill capping rates.
American consumers & small businesses rely on credit
- About 80 percent of American adults had a credit card in 2024, and most use them as flexible, short-term credit tools. Two-thirds of actively used credit cards carry a balance for less than a year.
- When more than a third of Americans aren't able to cover a $400 expense without selling or borrowing, credit cards are an important financial tool for everyday consumers.
- Credit cards also provide quick and nimble access to capital that small businesses rely on.
- Between 2021 and 2023, "55% of businesses report using business credit cards for financing in the past 12 months, far exceeding reliance on alternatives such as credit lines, loans, or internal funding."
- The credit card marketplace is highly competitive, with thousands of issuers in the U.S. Competitive pricing allows lenders to offer credit to consumers who need it most.
- Rate caps would force issuers to approve fewer applicants, reduce credit limits, or stop offering credit to higher-risk borrowers altogether. Americans will be worse off without the reliable safety net that credit cards provide.
Credit card issuers are highly regulated and focused on consumer protection
- Credit card issuers operate within one of the most comprehensive consumer protection frameworks in financial services. These laws and regulations ensure that consumers are protected, which creates a safer and more predictable borrowing environment than many unregulated credit products.
- Federal laws are in place to protect consumers. The Truth in Lending Act (TILA) and the Fair Credit Billing Act (FCBA) require credit card issuers to disclose key terms, like interest rates, fees, and repayment rules in a standardized format so consumers can make informed decisions before borrowing.
- The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) strengthened fairness and transparency in credit card lending by protecting consumers from unfair practices and requiring clearer disclosures and notice periods for changes to account terms.
Credit cards are better than alternatives. Without them, consumers and small businesses are pushed to unregulated, risky options.
- Without access to the safety net credit cards provide, consumers and businesses will be forced to go to exploitative and riskier alternatives, such as payday loans and high-cost installment services.
- Research has shown that when consumers no longer have access to traditional credit, they are significantly more likely to turn to payday lenders.
- Payday lenders often carry annualized interest rates exceeding 400% and provide fewer consumer protections than credit cards.
- More often than not, consumers become trapped within a debt cycle, taking out multiple loans to cover basic living expenses.