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NAFCU and several other financial services industry trade groups sent a letter to Sen. Josh Hawley, R-Mo., to voice opposition to his Capping Credit Card Interest Rates Act (S. 2760). The groups argued that imposing an all-in annual percentage rate (APR) cap for credit cards at 18 percent “would severely restrict the availability of this type of credit for everyday consumers and effectively harm the very people the proposed legislation seeks to protect.”

The groups explained the arbitrary “all-in” APR calculation would include credit card interest rates, all associated fees, penalties, and add-on products such as warranties – causing credit cards to exceed the cap and forcing institutions to eliminate or reduce credit card products and features.

They also flagged the consequences of Hawley’s legislation would be compounded by the CFPB’s credit card late fees proposal. The bureau estimates an $8 cap on credit card late fees would increase APRs about 2 percent – “this would push millions more credit card accounts over the legislation’s 18 percent cap, eliminating a critical source of credit for everyday consumers,” the trades wrote.

“Credit cards are the primary vehicles for expanding financial inclusion and are one of the most highly regulated financial products available,” the groups highlighted. “Research shows that credit cards are the number one way that people who are ‘credit invisible’ can become credit visible and grow their credit history, helping them gain access to other products like mortgages and auto loans.”

Read the full letter.

NAFCU, CUNA, and the Defense Credit Union Council (DCUC) shared similar concerns with Senate leaders Tuesday, as Hawley has filed the bill as an amendment to the chamber’s proposed “minibus” appropriations bill.

NAFCU will continue to advocate against harmful policies that will restrict consumers’ access to safe and affordable credit.