A proposed amendment to add a credit card rate cap to an unrelated bill on stablecoin regulation would devastate credit access for millions of consumers and small businesses, the American Bankers Association and 52 state bankers associations said today in a letter to Senate leaders.
Sen. Josh Hawley (R-Mo.) this week filed an amendment to add the text of the 10 Percent Credit Card Interest Rate Cap Act to the GENIUS Act, which would establish a regulatory framework for payment stablecoins. The amendment would impose an all-in annual percentage rate cap at 10% on credit cards. In their letter, the associations said that multiple studies have shown that even modest government price controls raise costs rather than lowering them.
“Massive government intervention dictating the terms of a highly popular unsecured credit product would restrict or outright eliminate the availability of this type of short-term revolving line of credit for millions of Americans,” they said.
An ABA analysis conducted in 2020 found that if a 15% interest rate cap were enacted, nearly 95% of subprime borrowers would be at risk of losing access to credit cards — equivalent to 65 million accounts. The negative impact on credit access would be even more pronounced at 10%.
For many Americans, a credit card is a critical source of funds in times of need, such as when they face an unexpected healthcare bill or an expensive car or home appliance repair, the associations said.
“If the government dictates the price of credit, lenders will be forced to tighten underwriting practices, lower credit lines and reduce cardholder rewards to manage their credit risk,” they said. “They may also increase annual fees, impose monthly maintenance fees, or implement other pricing changes to partially offset the revenue loss caused by the rate cap.
“Given that the 10 Percent Credit Card Interest Rate Cap Act amendment includes provisions that severely restrict issuers’ ability to recoup revenue, the bill’s impact on credit access would be even more acute. Simply put, issuers would be compelled to reduce or eliminate access to credit for all but the lowest-risk customers,” they added.
It’s not yet clear when the Senate will begin voting on amendments to the stablecoin legislation and if Hawley’s amendment will be considered.
