NewsGlobalStudy: $100 Billion Annual Savings for Americans Under Proposed 10% Credit Card Rate CapStudy: $100 Billion Annual Savings for Americans Under Proposed 10% Credit Card Rate Cap
A Vanderbilt University study reveals that American consumers could save $100 billion yearly if credit card rates were capped at 10%. With current credit card debt at $1.21 trillion and average rates around 21%, a 15% cap would save $48 billion annually. Banks could maintain profitability through interchange fees, but may reduce rewards programs. Several lawmakers support the 10% cap proposal, while the banking industry opposes it, citing potential harm to their business model and rewards programs.
*this image is generated using AI for illustrative purposes only.
A recent study by Vanderbilt University has revealed that American consumers could potentially save a staggering $100 billion annually in interest costs if credit card rates were capped at 10%, as proposed during a previous presidential campaign.
Key Findings
- Americans currently carry $1.21 trillion in credit card debt.
- Average credit card interest rates have surged to around 21.00%, up from 12.00% a decade ago.
- A 15.00% rate cap would result in $48 billion yearly savings for consumers.
- A 10.00% rate cap would lead to $100 billion in annual savings.
Impact on Banks and Rewards Programs
The research suggests that banks could maintain profitability even with rate caps, primarily due to interchange revenue from merchant fees. However, the implementation of such caps would likely necessitate some adjustments:
- Reduction in rewards programs, particularly for customers with lower credit scores.
- Potential maintenance of profitability through interchange fees.
Legislative Support
Several lawmakers have introduced bills supporting the 10.00% rate cap proposal, including:
- Sen. Josh Hawley
- Sen. Bernie Sanders
- Rep. Alexandria Ocasio-Cortez
Industry Opposition
The banking industry has expressed opposition to such caps, arguing that they would:
- Harm the credit card business model
- Negatively impact rewards programs
Conclusion
While the proposed credit card rate cap presents significant potential savings for American consumers, it also faces challenges from the banking industry. The debate continues as lawmakers, consumers, and financial institutions weigh the pros and cons of this transformative proposal.
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