Politics: AOC and Sanders call for capping credit card interest rates at 15% - PressFrom - US
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PoliticsAOC and Sanders call for capping credit card interest rates at 15%

20:40  09 may  2019
20:40  09 may  2019 Source:   washingtonexaminer.com

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How to negotiate a lower credit card interest rate . 1. Evaluate your current situation. Before you call the customer service number on the back of your Do call again if your initial request for a lower interest rate is declined. And even if you do achieve a lower rate , you can still try to call back in six

The CARD Act doesn't set a cap on interest rates , but it can help you if your rates rise. The reason is that state usury limits on credit card interest rates have become largely irrelevant for banks, thanks to a combination of federal laws and a Supreme Court decision.

AOC and Sanders call for capping credit card interest rates at 15%© Keith SrakocicSen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez will introduce legislation to create a national cap on interest rates for credit cards.

The Sanders-Ocasio-Cortez legislation would limit credit card annual percentage rates to 15%. Current credit card annual percentage interest rates typically range from the mid-teens to high 20s, depending on a person’s credit score.

“Every major religion on Earth ... has condemned usury because it is really disgusting,” said Sanders, a Vermont independent senator who is also a leading candidate in the Democratic presidential primary. “What Alexandria and I are proposing in this legislation is not complicated ... Bringing back the concept of usury laws, where banks cannot try to get blood out of a stone.”

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Most credit card variable interest rates can change with the Prime Rate . The Prime Rate is an interest rate that is three percentage points above the federal funds rate , which is set by the Federal Reserve Bank. Because this interest rate can increase, cardholders should be careful not to incur

"Do you favor a national cap on credit card interest rates ?" we asked in our latest online poll. As of midday Tuesday, 1,241 answered yes and 41 said no. It would set a national usury rate at 15 percent. Under their amendment, the Federal Reserve would have the authority to allow credit card

Sanders does not sit on a committee with jurisdiction over banking laws, though Ocasio-Cortez, the Democratic sponsor of the interest rate cap bill in the House of Representatives, sits on the Financial Services Committee.

“What happens when everyday banks start to charge higher and higher interest rates? Essentially your credit card becomes a payday loan,” said Ocasio-Cortez.

The duo wants to effectively undo a 1978 Supreme Court decision that allows national banks to export the loan rates they can charge in their home state to other states that have usury caps. The decision helped lead to the expansion of the credit card industry into its current form.

“Essentially what we are doing is going around that decision,” said Sanders.

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Credit card interest rates drain you of your hard earned money. A meal can easily cost to $ 15 more if left to linger in an outstanding credit card balance. That’s why well-intended people fall behind on their payments and end up barely able to make the minimums each month

Credit card interest rates in 2016 were still among the lowest they’ve been in the past 30 years, at least in purely nominal terms. The chart below tracks average credit card rates in both nominal and real terms, along with the Consumer Price Index, the the federal statistic used to measure inflation.

Sanders and Ocasio-Cortez’s offices did not respond to requests for more detail as to how the legislation would work.

Brian Knight, a senior research fellow at the Mercatus Center, questioned whether an interest rate cap would cut off access to borrowers that banks and credit card companies view as riskier bets.

“Loans are like any other product, if you cap the price below the point where it makes sense for anyone to offer the product, they won’t offer the product,” said Knight. “If there’s another type of loan or investment that [banks] could make that will give them a higher rate of investment, they’ll put it there instead."

Banks could extend the terms of loans in order to recoup lost interest revenue, or simply not loan to those with lower credit scores, Knight said.

If that were to happen, “You run into illegal sources of credit,” said Knight. “A lot of credit activity in this country was loan sharking, and the mob made a lot of its money on loan sharking.”

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