ARLINGTON, Va. (February 6, 2024)—After Senators Josh Hawley (R-Mo.) and Bernie Sanders (I-Vt.) introduced legislation to cap annual interest rates on credit cards at 10 percent, Online Lenders Alliance Chief Executive Officer Andrew Duke issued the following statement:
“Whether on a personal loan or a credit card, interest rate caps reduce consumers’ access to the credit products they need to manage everyday expenses and emergencies alike.
“Consistently, capping interest rates does not make credit less expensive, only less available. With roughly 600 million credit card accounts in the United States, a significant percentage of consumers will find themselves in a much worse financial situation if this becomes law, with fewer options to manage their finances and many having no options at all.
“Members of Congress who are concerned with their constituents’ ability to access credit products should reject this disastrous legislation.”
A recent academic study by three leading economists found that rate caps in Illinois reduced the number of loans to subprime borrowers by 44 percent while increasing the average loan size to subprime borrowers by 40 percent. Further research data collected and analyzed by the Online Lenders Alliance found that in Illinois and New Mexico, two states that have implemented rate caps on consumer loans, most borrowers have been unable to borrow money when they needed it since the rate cap took effect.
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