Interest rates for credit card holders have steadily climbed to a record high of more than 20% on average even as overall debt has grown in 2023. That means that Americans on the fringes are paying more than 30%.
Congress is looking to limit credit card interest rates so as to limit the financial burdens on the middle class.
A proposal in the United States Senate is looking to cap rates at 18% while also clamping down on additional fees such as late payment penalties. The bill is a bipartisan effort with two senators from each major party introducing a bill earlier this year.
However, there is substantial pushback as substantial company profit is made on interest rates and several attempts have failed in the past.
The number of credit card accounts skyrocketed during the pandemic as American household debt has increased substantially since 2019.
Current law poses almost no restraint on banks’ ability to set interest rates on credit cards and the banking industry has been opposed to any enforced cap, with industry trade groups stating that it would restrict credit card availability for consumers.
However, the average credit card balance with interest is more than $5,500.