WASHINGTON–Credit unions are pushing back on the Empowering States’ Rights to Protect Consumers Act, which would restore states’ ability to cap consumer loan interest rates and which seeks to specifically reduce credit card rates.
The legislation is sponsored by Sens. Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA), Jack Reed (D-RI), and Jeff Merkley (D-OR). It follows President Trump’s recent call for a 10% cap on credit card interest rates.
“Too many Rhode Islanders are stuck under a mountain of credit card debt that is driven ever higher by compounding interest rates and fees dictated by corporations,” said Whitehouse in a statement. “Our bill will restore to states the ability to protect their own citizens from predatory rates and help get families more breathing room on their credit card bills.”
‘Not the Right Solution’
“Credit unions share the goal of helping Americans manage debt and improve their financial well-being, but creating a patchwork of state-by-state interest rate caps is not the right solution,” America’s Credit Unions President and CEO Sctott Simpson said in a statement. “This approach would create a fragmented lending system, increase compliance complexity, and ultimately reduce the availability of responsible, lower-cost credit offered by not-for-profit credit unions. Credit unions already deliver some of the lowest credit card rates in the market because of their member-owned structure.
Where Congress Should Focus
“If Congress wants to address rising debt, it should focus on policies that expand access to safe, affordable credit and support financial stability, rather than proposals that risk cutting off millions of consumers from the credit options they depend on,” the statement continued. “Congress should look to credit unions for solutions on affordability.”
