Sanders, Hawley draft bill to cap credit card interest at 10%

Bloomberg News

A new bill establishing a 10% cap on credit card interest rates was introduced in the Senate on Tuesday with bipartisan support. 

Sens. Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., introduced the legislation in hopes of holding President Donald Trump to his campaign promise to limit credit card costs as an anti-inflationary measure. 

In September, Trump's campaign called for a 10% credit card rate cap to provide "relief for hardworking Americans who are struggling to make ends meet and cannot afford hefty interest payments on top of the skyrocketing costs of mortgages, rent, groceries and gas." The proposal has been panned by economists and industry leaders who say such a cap would kill the credit card business model. They argue that a rate cap would prevent banks from recouping costs and covering risks associated with issuing credit cards.

The Sanders-Hawley bill calls for rates to be capped immediately and for the restriction to remain in place for five years. The proposal is the first sign of populist unity across the political aisle in the 119th Congress and under Trump's second presidential term. 

"During the campaign, President Trump pledged to cap credit card interest rates at 10%," Sanders said in a written statement. "Today, I am proud to be introducing bipartisan legislation with Senator Hawley to do just that."

Hawley is a socially conservative Republican, while Sanders — an Independent who caucuses with the Democrats — is a left-wing standard bearer and former Democratic Presidential nominee candidate.

Noting that many credit cards charge interest rates in excess of 25%, Sanders accused issuers of engaging in "extortion and loan sharking," arguing that such rates have enabled banks to rake in profits and pay out large salaries to executives while American households are increasingly burdened by credit card debt — which surpassed $1 trillion nationwide in late 2023.

"We cannot continue to allow big banks to make huge profits ripping off the American people," Sanders wrote. "This legislation will provide working families struggling to pay their bills with desperately needed financial relief."

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Hawley has championed his own brand of economic populism in recent years. In Sept. 2023, he introduced a bill that would have capped credit card interest rates at 18%. In a post on X on Tuesday, Hawley called credit card rates "out of control," noting that Americans accrued $105 billion of credit card interest in 2022 alone.

"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," Hawley said in a written statement. "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."

Trump's call for an interest rate cap was among his more economically populist proposals floated on the campaign trail drawing interest and intrigue on both ends of the political spectrum. 

Trump has not addressed the topic directly since taking office, but Scott Bessent, Trump's pick for Treasury secretary, indicated he would be open to exploring the idea. 

"Increased borrowing costs and high inflation of the past four years have put immense pressure on the budgets of so many American families. President Trump specifically indicated his concern about the impact of high credit card rates during the campaign," Bessent wrote in a response to a question from Sen. Elizabeth Warren, D-Mass., as part of his confirmation process. "The Treasury Secretary does not have the authority to enact credit card rate caps, but if confirmed I look forward to working with my colleagues in the Administration and with Congress on policies to make life more affordable."