Bernie Sanders Pushes 10% Credit Card Interest Cap—Could It Actually Happen?

In a rare show of bipartisan cooperation, Senator Bernie Sanders (I-VT) and Senator Josh Hawley (R-MO) have introduced a bill to cap credit card interest rates at 10%. The legislation aligns with a promise made by President Donald Trump during his 2024 campaign, where he vowed to impose a temporary cap on rates that often exceed 20% or more.

"This legislation will provide working families struggling to pay their bills with desperately needed financial relief," Sanders said in a statement. Hawley echoed the sentiment, calling high interest rates "exploitative" and urging swift action.

Credit card debt in the U.S. has reached record highs, hitting $1.17 trillion in Q3 of 2024, according to the New York Federal Reserve. With the average interest rate hovering above 20%, many Americans find themselves trapped in debt cycles, unable to pay off balances due to steep interest charges. Meanwhile, financial institutions have reaped massive profits. In 2022 alone, credit card companies collected $105 billion in interest, according to the Consumer Financial Protection Bureau (CFPB). The Sanders-Hawley bill aims to slash this number by more than half, potentially saving consumers billions.

Despite its consumer-friendly appeal, the bill faces fierce resistance from financial institutions and industry experts. Critics argue that capping interest rates at 10% could lead to lenders pulling back on offering credit to riskier borrowers, banks compensating for lost revenue by increasing other fees or reducing rewards programs, and consumers denied traditional credit turning to payday lenders, where interest rates can soar beyond 300% APR. Ted Rossman, senior analyst at Bankrate, warned, “A 10% cap wouldn’t be nearly as profitable for lenders, so they wouldn’t do as much lending. While high interest rates are bad, access to credit is crucial for many households.”

Public sentiment appears to favor the legislation, with a recent survey showing that 77% of credit cardholders support a cap on interest rates. Sanders' office expects a major lobbying battle from the financial sector, which has historically spent billions to influence Congress. "The question is, will Congress listen to big bank CEOs who want to protect their profits, or will they listen to the overwhelming majority of the American people?" asked Anna Bahr, Sanders’ communications director. With Trump previously voicing support for a similar cap, his endorsement could be pivotal. However, many Republicans remain skeptical of government-imposed financial regulations.

The bill’s future remains uncertain. While it has gained bipartisan backing, the influence of financial institutions and opposition from some lawmakers could stall its progress. As debates unfold, consumers, banks, and politicians will all have a stake in the outcome. Will Congress side with Sanders and Hawley to curb credit card interest rates? Or will financial institutions successfully block the effort? One thing is clear—this battle is just beginning.