The newly introduced Interest Rate Reduction Act would limit rates on all credit cards and other consumer loans to just 15 percent, according to New York representative Maurice Hinchey, who wrote the law. The law was written out of concern that lenders can boost rates with little warning and justification.
“Many hardworking Americans are using credit cards to make ends meet in this recovering economy, but credit card companies are finding new ways to squeeze the middle class despite significant reforms in the last Congress,” Hinchey said.
However, the bill would grant the Federal Reserve Board the power to allow higher rates if the 15 percent cap threatened a company’s financial stability, the report said. It could only do so if money market interest rates had increased over the previous six months.
This is the second credit card fee cap bill Hinchey has introduced, the report said. His previous attempt would have limited rates at 18 percent.
Credit card lenders have already faced significantly reduced revenue from interest payments. However, they have profited since the passage of many government overhauls due to consumers making a greater effort to improve their credit health.