Americans Rely on Safe Credit

For millions of Americans, credit cards are not just a payment method. They are a flexible, short-term credit tool that helps families manage everyday expenses, bridge gaps between paychecks, and cover unexpected costs.

Over 80% of Americans hold a credit card in their name, and more than a third of Americans say they couldn't cover an unexpected $400 expense without selling or borrowing something. For these households, access to safe and reliable credit can be the difference between a temporary setback and a deeper financial crisis.

That is why proposals to cap credit card interest rates deserve careful scrutiny. While rate caps may sound straightforward, they would likely make credit harder to access for the very consumers and small businesses policymakers are seeking to help.

Consumers and businesses rely on access to credit

Credit cards play a unique role in household financial stability. Unlike debit cards or cash, credit cards provide consumers with immediate access to short-term financing when expenses arise before income does.

They also matter for small businesses. Recent research from the University of Chicago found that over 55% of businesses used credit cards for financing in the prior 12 months—well above the use level of other financing tools. Entrepreneurs particularly value credit cards because they are accessible, flexible, and useful for managing cash-flow shocks. Put simply, credit cards offer consumers and businesses the quickest and most nimble loans when budgets are tight, expenses are unexpected, or timing matters.

Rate caps would restrict access

Rate caps are a blunt government intervention with serious consequences in consumer credit markets.

Credit card lending is already highly regulated and highly competitive. Issuers evaluate risk, price credit accordingly, and operate under federal consumer protection laws that require clear disclosures, fair billing practices, and notice before certain changes to account terms.

If lenders are unable to price for risk, they will have limited options: approve fewer applicants, reduce credit limits, raise other fees, or stop offering cards to higher-risk borrowers altogether. That would not eliminate consumers' need for credit. It would simply make safe, regulated credit harder to get.

The alternatives are risky and often predatory

When consumers lose access to traditional credit, they often turn to more expensive and less transparent options, including payday loans, pawn loans, or other high-cost nonbank products. For some payday loans, the interest rate reaches well into the hundreds of percentage points for a 14-day loan. The interest on predatory loans compounds quickly, pushing already-stretched consumers into deepening debt.

That is the risk of pulling back access to credit cards. If banks aren't able to offer credit due to government pressure on interest rates, high-need, high-risk consumers will turn to riskier, more opaque lenders.

Credit is part of the solution

Credit card debt is a serious issue, and policymakers should take affordability concerns seriously. Strong consumer protections, financial literacy, transparent disclosures, and competitive markets all play an important role in helping Americans use credit responsibly. But cutting off access to credit is not a solution to the affordability crisis.

Credit cards provide safe, regulated, and flexible financing for households and small businesses navigating sudden expenses and uneven cash flow. New government restrictions that reduce access would leave many Americans with fewer options, not better ones.

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