AOC and Republican propose 10% credit card rate cap

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Two unlikely congressional allies have joined forces to propose legislation that would establish a 10% ceiling on credit card interest rates, echoing a policy previously championed by President Trump during his 2024 campaign.

Representatives Anna Paulina Luna (R-Fla.) and Alexandria Ocasio-Cortez (D-NY), typically political opposites, introduced their bipartisan bill on Friday seeking to immediately restrict credit card interest rates from exceeding 10%.

“For too long, credit card companies have abused working class Americans with absurd interest rates, trapping them in an almost insurmountable amount of debt,” Luna said in a statement.

“We need a fair solution – and that means getting rid of the status quo and putting a reasonable cap on interest rates.”

AOC teams up with Florida Republican Rep. Anna Paulina Luna for bill capping credit card interest at 10% pic.twitter.com/RwpFD4FGAN

— Yelisaveta Petrov (@YelisavetaPaUSA) March 9, 2025

The initiative follows similar legislation introduced last month by Senators Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.). Ocasio-Cortez has previously supported comparable measures, including a 2019 proposal for a 15% interest rate cap.

“Credit cards with high interest rates regularly trap working people in endless cycles of debt,” she argued. “At a time when families are struggling to make ends meet, we cannot allow big banks to shake down our communities for profit.”

Currently, credit card interest rates average 28.71%, according to Forbes, nearly triple the proposed cap. These rates surged from approximately 15% during pandemic-induced inflation and have remained high since.

Federal Reserve data, which dates back to 1994, shows that credit card interest rates have never fallen to 10%. The lowest recorded rate was approximately 11.88% during the 2008 financial crisis.

Opposition to the proposal has been swift, with critics warning of potential economic consequences and reduced credit accessibility. The American Bankers Association, along with 52 state banking organizations, expressed their concerns in a letter to Sanders and Hawley.

“Government intervention prescribing the terms of a highly popular unsecured credit product would likely restrict or eliminate altogether the availability of this type of short-term revolving line of credit for millions of Americans who depend on this resource,” the groups wrote.

The banking organizations referenced studies from Oregon and Chile, where similar policies resulted in diminished credit access, stating: “The evidence is clear: price controls, such as interest rate caps, harm consumers. Laws that prevent lenders from charging a market rate of return will lead to less lending.”

Read "AOC teams up with Florida Republican Rep. Anna Paulina Luna for bill capping credit card interest at 10%" on Shostages.

A DEMOCRAT VOLUNTEERS TO WORK WITH A REPUBLICAN, IS IT A LONG CON, OR HAS SHE SEEN THE LIGHT
https://t.co/ny2FZvNZrd #SmartNews

— John D. Elmstedt Jr. (@Johnnystill1) March 9, 2025

The congresswomen highlighted the disparity between credit card rates and the Federal Reserve’s benchmark interest rate of 4.25% to 4.50%. Ocasio-Cortez also referenced Trump’s previous support for a 10% cap.

“While working Americans catch up, we’re going to put a temporary cap on credit card interest rates,” Trump told a crowd back in September. “We’re going to cap it at around 10%. We can’t let them make 25 and 30%.”

Economic experts have largely criticized the proposal. Arpit Gupta, associate professor of finance at New York University, noted: “We have some good academic work that interest rate caps will lead to rationing for credit cards. What we don’t know is whether this may actually be a good thing for some low credit score borrowers in a behavioral debt trap.”

“Such a policy, though well meaning, will almost certainly lead to credit rationing whereby low-income borrowers get no credit at all,” C. Kirabo Jackson, an economist at Northwestern University, said. “A cap at 30% could be beneficial, but 10 is too low. To be clear, this is not just a hot take, research indicates this.”

The legislation currently faces uncertain prospects in Congress, and Trump’s continued support for the measure remains unclear should he return to the White House.