In a bold political move, Senator Bernie Sanders has announced his intention to introduce a bill that would cap credit card interest rates at 10%. President-elect Donald Trump, who also voiced support for a similar cap during his campaign, may find himself aligned with Sanders on this issue.
Fox News reported that Sanders' proposed legislation aligns with Trump's campaign promise, aiming to alleviate financial pressures caused by high credit card rates.
The need for such legislation has grown more urgent with rising credit card debt nationally. According to recent statistics, Americans' credit card debt reached over $1.17 trillion in the third quarter of 2024, underscoring the increasing financial strain on households.
Current rates exacerbate this burden, with the average credit card interest rate as of December hitting a steep 24.43%.
This makes even minimal revolving balances difficult to manage, particularly for those already struggling financially.
During his presidential campaign, particularly in an address in New York before his victory over Vice President Kamala Harris, Trump proposed a similar 10% cap as a temporary relief measure to help Americans "catch up" financially. This has opened a rare window for bipartisan cooperation in a deeply divided political climate.
Senator Sanders was quick to express his intentions by stating, "During the recent campaign Donald Trump proposed a 10% cap on credit card interest rates. Great idea. Let’s see if he supports the legislation that I will introduce to do just that."
Karoline Leavitt, a spokesperson for the transition team, reiterated Trump's commitment to his campaign promises, indicating an endorsement of measures like those proposed by Sanders could be forthcoming.
She emphasized, "The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail. He will deliver."
However, not all political figures are in agreement on the matter. Senator Tim Scott, a key Trump ally and incoming Chairman of the Senate Banking Committee, has previously voiced his opposition to similar measures during the Biden administration.
Scott has argued that regulations like capping credit card late fees could have unintended consequences. Specifically, he mentioned, "Decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board."
This presents a potential hurdle for Sanders' legislation as it moves through the Senate, where Scott's influence could shape its reception and debate.
The average American credit card holder could see significant relief if Sanders' bill passes. With rates capped at 10%, the cost of maintaining credit card debt would drop, potentially freeing up income for other necessities or debt repayment.
This becomes even more significant in light of current economic conditions where many families are still recovering from the financial impacts of the COVID-19 pandemic.
However, the exact details of Sanders' proposal, including whether the cap would be permanent or temporary, remain unclear. His office has not provided specifics when asked to comment, leaving some uncertainty about the full scope and impact of the legislation.
The credit card industry, accustomed to higher interest rates that significantly exceed Sanders' proposed cap, would likely undergo substantial adjustments. Industry groups have previously opposed similar caps citing potential impacts on profit margins and risk management practices.