WASHINGTON–The Defense Credit Union Council (DCUC) has issued a letter to Senator Elizabeth Warren after Warren urged the acting director of the Consumer Financial Protection Bureau to use the agency’s authority to tackle what she said are high credit card costs, repeating a call that the Bureau support a proposed legislative cap of 10% for one year on credit cards.
Analysts have told the CU Daily that such a cap would need to be passed by Congress and then enforced by the CFPB.
As the CU Daily reported here, the House Financial Services Committee on Thursday voted to reject an amendment to implement such a 10% threshold. President Trump has brought a new spotlight to such a cap in both social media posts and in remarks before the World Economic Forum in Switzerland.
In a letter dated Jan. 23 to CFPB Acting Director Russ Vought, the Massachusetts Democrat criticized the bureau for “prioritizing dismantling” its own consumer protections instead of deploying its tools to help reduce credit card costs, even as Congress considers a broader plan to limit interest rates to 10% for one year.
“President Trump called for ‘a one year cap on Credit Card Interest Rates of 10 %’ … while Congress considers legislation to address the issue, your own actions are directly undermining the President’s stated goals,” Warren wrote, urging the agency to act on late fees, surprise interest charges and other practices she said contribute to high consumer costs.
Five Concrete Steps
Warren’s letter lays out five concrete steps she says the CFPB could take to rein in credit card costs immediately, including tightening compliance with existing disclosure and fee rules and cracking down on so-called “bait-and-switch” reward tactics.
As the CU Daily has been reporting, consumer advocates and some lawmakers see a rate cap as a way to soften burdens on households carrying revolving balances, but industry officials warn such curbs could limit access to credit for lower-income and subprime borrowers.
DCUC: Caution Over ‘One-Size-Fits-All’ Approach
In its response, DCUC reaffirmed its shared commitment to protecting consumers from abusive financial practices, while strongly cautioning against a one-size-fits-all 10% interest rate cap that would restrict access to safe credit for military families, servicemembers, veterans, and lower-income borrowers.
Writing on behalf of the nation’s defense-focused credit unions serving more than 40 million military-affiliated members, DCUC emphasized that credit unions are fundamentally different from for-profit issuers.
As member-owned, not-for-profit cooperatives, credit unions return earnings to members through lower loan rates, reduced fees, and higher savings returns, rather than maximizing profits or charging so-called ‘junk fees’,” the association said.
‘Aligned With Consumers’
“Credit unions’ incentives are aligned with consumer interests, not extracting profit,” DCUC Chief Advocacy Officer Jason Stverak stated. “We take great pride in the trust our military and veteran member-owners place in us to provide fair, affordable financial services.”
While acknowledging the goal of making credit more affordable, DCUC reiterated its opposition to a blanket 10% interest rate cap, warning that such a proposal would produce serious unintended consequences.
DCUC noted federal credit unions already operate under a long-standing statutory interest rate cap, currently 18% for most loans, and fully comply with the Military Lending Act’s 36% cap for active-duty servicemembers. Forcing rates down to 10% would severely constrain risk-based lending and disproportionately impact young servicemembers, junior enlisted personnel, and households still building credit, according to DCUC.
Reduced Access
“A rigid federal cap would reduce access to credit by limiting credit unions’ ability to serve higher-risk borrowers,” DCUC cautioned. “Many credit unions would be forced to tighten underwriting or scale back credit card and small-dollar loan programs.”
DCUC also warned that restricting responsible, regulated lenders “does not eliminate the need for credit but instead risks driving vulnerable consumers toward predatory alternatives outside the credit union system.”
“Limiting mission-driven institutions’ ability to price loans according to risk does not eliminate demand; it shifts borrowers to less regulated, higher-cost sources,” the letter states.
In its response, DCUC addressed additional policy recommendations outlined by Senator Warren, including credit card late fees, deferred-interest promotions, rewards transparency, compliance examinations, and consumer complaint resolution. DCUC said it sought to express its support for strong enforcement against deceptive practices and bad actors, while urging regulators to preserve flexibility for community-based institutions that already operate with consumer-first models.
The full letter can be found here.
