Bernie Sanders, AOC Team Up to Cap Credit Card Interest Rate at 15 Percent
|thenorthstar||May 13, 2019|
Senator Bernie Sanders (I-Vt.) and Congresswoman Alexandria Ocasio-Cortez (D-N.Y.) banded together on May 9 to unveil a new bill that would cap credit card interest rates at 15 percent. The Loan Shark Prevention Act would “combat the predatory lending practices of America’s big banks” and protect consumers by imposing a 15 percent federal cap on credit card interest rates.
“The reality is that today’s modern-day loan sharks are no longer lurking on street corners breaking kneecaps to collect their payments,” said Sanders in a statement. “They wear three-piece suits and work on Wall Street, where they make hundreds of millions in total compensation and head financial institutions like JPMorgan Chase, Citigroup, Bank of America, and American Express.” “Under the legislation we are introducing today, we would establish a national usury rate to make sure that no bank or store in America could charge an interest rate higher than 15 percent,” Sanders continued.
In a Medium post, Sanders noted that credit card companies drew in nearly $180 billion in revenue from interest rates and fees last year, according to Business Insider. Sanders said those companies are expected to charge people $122 billion in interest rates in 2019. Credit card companies are “ripping off the middle class,” the Senator wrote, noting that JP Morgan Chases, American Express, and Kenneth Chenault are profiting off of Americans.
Banks are allowed to borrow money at less than 2.5 percent from the Federal Reserve while the median consumer credit card interest rate in America is 21.36 percent, the Medium post noted. Currently, Americans hold a trillion dollars in credit card debt, and millions of consumers are paying credit card interest rates from 20 to 30 percent.
“The American people are sick and tired of being ripped off by the same financial institutions that they bailed out ten years ago,” the post by Sanders read. “If we are going to create a financial system that works for all Americans, we have got to stop financial institutions from charging outrageous interest rates and fees.”
The proposed bill would also end payday lending scams and expand affordable banking options by utilizing the post office to assist low-income communities engaged in “basic banking services.”
“The Postal Service already cashes Treasury checks and issues money orders. The USPS should fully exercise its existing statutory authority and implement pilot programs offering affordable financial services, including ATMs, paycheck cashing, bill payment and electronic money transfers in post offices,” the post read.
The bill has garnered the support of consumer advocacy groups like the Consumer Action, Demand Progress Action, NETWORK Lobby for Catholic Social Justice, CREDO Action, Community Change Action, the Center for Popular Democracy, People’s Action, and many other organizations.
“There is no justifiable reason that a person — no matter their background — should be charged an interest rate higher than 15 percent. Rates higher than 15 percent are predatory debt traps, designed to keep working families underwater and allow predatory companies to enrich themselves off the misfortune of others,” Ocasio-Cortez said in the statement.
About the Author
Maria Perez is a breaking news writer for The North Star. She has an M.A. in Urban Reporting from the CUNY Graduate School of Journalism. She has been published in the various venues, including Newsweek, Juvenile Justice Information Exchange, City Limits, and local newspapers like The Wave and The Home Reporter.