How Much the Effect of Capping Credit Card Interest Rates?

A new law favored by two Democratic lawmakers yesterday. The law would set a new national cap on the interest rates for forbidding credit card companies from charging interest rates more than 16% , and to the cardholders who exceed a credit limit or make a late payment would be charged fees no more than $15.


College students who want to open credit card accounts also become much harder with the bill passed in May which banned certain fees. And, ahead of the implementation of the federal CARD Act, nearly all the major banks have concurred increased interest rates. It go against the consumer's interest with the increased interest rates by credit issuers. With this legislation, credit agencies have been restricted their greed for profits on all the American people, who paid for the mission.

It is no surprise that the bill met with vehement opposition from the financial services industry. Especially the representatives of South Dakota and Delaware, South Dakota is home to Citigroup’s credit-card division, while Delaware is home to the credit-card arms of Bank of America, HSBC, and JP Morgan Chase. Under the new bill, it become harder to get consumer credit, the economy of Delaware has taken a hit, employment rate of financial fell by 10 percentage points since 2007,while overall salary declined 25% accordingly. So, in order to attract credit card issuers to set up operations in the state, these two states repealed the terms of interest rates cap of the new law.

However, the effect is quite uncertain for the law to positive high or low credit card interest rates by capping credit card interest rates.