Vermont independent Senator Bernie Sanders and freshman New York Representative Alexandria Ocasio-Cortez plan to tackle the issue of predatory lending in the form of credit cards offered, referring to the banks that offer the cards as modern-day loan sharks.
They hope to cap credit card interest rates at 15% with legislation they introduced on Thursday.
An outline criticized banks for charging on average more than 17% interest on credit card balances while they are able to borrow money at less than 2.5%.
In a statement with the announcement of the new consumer protection banking legislation, they said:
“Today’s loan sharks wear expensive suits and work on Wall Street, where they make hundreds of millions of dollars in total compensation by charging sky-high fees and usurious interest rates.”
Ocasio-Cortez also shared the news on her Twitter account.
“There is no reason a person should pay more than 15% interest in the United States. It’s common sense – in fact, we had these Usury laws until the 70s. (Max interest rates are record-high for ppl with excellent credit, too.)”
“It’s a debt trap for working people + it has to end.”
Americans are currently saddled with more than $1 trillion in credit card debt.
Figures cited from CreditCards.com puts the national average interest rate on credit cards at 17.73% with many people paying much higher interest. The rate limit they propose in their legislation would also apply to payday loans, another form of lending flagged as predatory and poorly regulated.
People had mixed reactions to the proposed legislation.
People pointed out that for many the debt trap began in college. And that consumer protections did exist in the past.
They also brought up other consumer protections that were rolled back.
A lively debate occurred on Twitter over the proposal.
The bill may pass in the House of Representatives, but may face an uphill battle in the Senate.
Painful to watch, imperative to see.