ARLINGTON, Va. (September 30, 2024)—After former president and current Republican presidential nominee Donald Trump proposed a temporary 10 percent APR cap on credit card interest rates, Online Lenders Alliance Chief Executive Officer Andrew Duke issued the following statement:
“Interest rate caps result in bad outcomes for the Americans who rely on credit to manage their financial wellbeing. Consumers are left with fewer choices to help them manage their finances, and many find themselves with no option at all. As multiple studies have shown, capping interest rates does not make credit less expensive, it only reduces access to this much needed financial lifeline. Just as the recent rate caps on consumer loans in Illinois and New Mexico have driven lenders out of the market and left consumers worse off, a federal effort would similarly leave fewer consumers able to access those credit products.”
An academic study released last year 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 recently 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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