Seven leading financial groups that represent banks and credit unions of all sizes today sent a letter to Senators Bernie Sanders (D-Vt.) and Josh Hawley (R-Mo.) to oppose their proposed legislation that would create an annual percentage rate (APR) cap for credit cards at 10 percent. This measure would severely restrict the availability of this type of credit for everyday consumers.
As outlined in the letter, Sens. Sanders and Hawley’s proposal would harm the very people the legislation seeks to protect:
“Many consumers who currently rely on credit cards would be forced to turn elsewhere for short-term financing needs, including pawn shops, auto title lenders, or worse – such as loan sharks, unregulated online lenders, and the black market.”
Research is clear that rate caps worsen consumers’ financial health, which has ripple effects on the economy:
“Other research demonstrates that when consumers lose access to credit, they often reduce spending on essentials such as healthcare, education, and food, and are more likely to fall behind on bill, mortgage, and rent payments. Lack of a credit card would also likely reduce their consumption of items like furniture and clothing which not only negatively affects consumers, but also negatively affects the broader economy.”
Finally, the letter highlights financial institutions goals to help consumers:
“As responsible and well-regulated financial institutions, we share the goals of reducing the cost of consumer credit and increasing financial inclusion. Unfortunately, the 10 percent rate cap proposed in this legislation would stifle our shared financial inclusion goals, reduce access to credit, and push consumers to far more costly and less regulated lenders.”
To read the full letter, click HERE.
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About the American Bankers Association
The American Bankers Association is the voice of the nation’s $24.2 trillion banking industry, which is composed of small, regional and large banks that together employ approximately 2.1 million people, safeguard $19.1 trillion in deposits and extend $12.6 trillion in loans.
About America’s Credit Unions
America’s Credit Unions is the unified voice for not-for-profit credit unions and their more than 140 million members nationwide. America’s Credit Unions provides strong advocacy, resources and services to protect, empower and advance credit unions and the people and communities they serve. For more information about America’s Credit Unions, visit AmericasCreditUnions.org.
About Bank Policy Institute
The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.
About the Consumer Bankers Association
The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on Twitter @consumerbankers.
About the Independent Community Bankers of America
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation. As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.
About National Bankers Association
Founded in 1927, the National Bankers Association is the voice for the nation’s Minority Depository Institutions (MDIs). No other trade association is focused solely on the priorities, federal advocacy, and representation of minority-owned and -operated banks. Members include Black, Hispanic, Asian, Pacific Islander, Native American, and women-owned and -operated banks. MDIs are located across 32 states and the District of Columbia, Puerto Rico, and Guam. For more information, visit nationalbankers.org.
About American Financial Services Association
Formed in 1916, the American Financial Services Association (AFSA) is the primary trade association for the consumer credit industry, protecting access to credit and consumer choice. AFSA’s more than 450 corporate members provide consumers with many kinds of credit, including traditional installment loans, direct and indirect vehicle financing, mortgages, payment cards and non-vehicle retail sales finance.