Hawley/Sanders Credit Card Interest Cap Is a Gift to Payday Lenders and Loan Sharks
It would be nice if one of our two major political parties was consistent in its advocacy for free markets—for all freedom, for that matter. Instead, we get two senators, a Republican and a socialist who sits with the Democrats, teaming up to condescendingly save Americans from their own desire to borrow money. Their proposal to cap credit card interest at 10 percent is supposed to shield people from “exploitative” borrowing costs. Instead, it’s bound to cut off higher-risk borrowers from traditional credit and drive them into the arms of payday lenders and loan sharks.
Saving Borrowers From Themselves
“Working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon. It’s not just wrong, it’s exploitative. And it needs to end,” Sen. Josh Hawley (R–Mo.) huffed this week in a press release. “Capping credit card interest rates at 10%, just like President Trump campaigned on, is a simple way to provide meaningful relief to working people. Let’s do it.”
“During the campaign, President Trump pledged to cap credit card interest rates at ten percent,” Sen. Bernie Sanders (I–Vt.) chimed in. “Today, I am proud to be introducing bipartisan legislation with Senator Hawley to do just that.”
It’s said that great minds think alike. So, apparently, do the minds of economic ignoramuses with supposedly competing political brands. Hawley and Sanders peddle salvation from expensive credit, but instead they offer a world of hurt to the people they say they want to help.
Obviously, credit card issuers want to make as much money as they can from their business, but they compete with other banks, card issuers, and sources of credit for customers. So, they can’t just name a random high rate—essentially the price of loaning money—and expect people to pay. Instead, they set interest rates they expect will make them money without pricing themselves out of the market. They
Article from Reason.com
The Reason Magazine website is a go-to destination for libertarians seeking cogent analysis, investigative reporting, and thought-provoking commentary. Championing the principles of individual freedom, limited government, and free markets, the site offers a diverse range of articles, videos, and podcasts that challenge conventional wisdom and advocate for libertarian solutions. Whether you’re interested in politics, culture, or technology, Reason provides a unique lens that prioritizes liberty and rational discourse. It’s an essential resource for those who value critical thinking and nuanced debate in the pursuit of a freer society.
