CHARLOTTE — President Donald Trump is calling for a one-year 10% cap on credit card interest rates, starting Tuesday.
That’s down from an average of about 22%, according to the Federal Reserve.
[ ALSO READ >> Interest rate cuts may save you money on loans and credit cards ]
Many consumers are excited by the proposal.
“I’m sure it would help out a lot of people,” Jonathan Foster said.
The proposal aims to lower borrowing costs and increase affordability, but Matthew Metzgar, a professor and economist at UNC Charlotte, warns the policy could come with tradeoffs. He says banks may respond by limiting who they lend to.
“If you cap all the rates at 10%, then if someone is a riskier bet, then the bank simply just won’t lend them money,” Metzgar told Channel 9’s Miana Massey. “People with good credit, they’ll still be able to get those cards, but people with moderate or low credit won’t have any access to the banking system.”
Congress has introduced bills capping interest rates in years past, but often face pushback. There is no word just yet on how this change would be implemented.
The White House says the president expects credit card companies to comply, but experts say enforcement would likely require action from Congress.
VIDEO: ‘Little over 30K’: A nonprofit that can help you erase credit card debt
This browser does not support the video element.