“The proposal to limit credit card interest rates will reduce access to credit for those who need it most.”
WASHINGTON – Today, U.S. Senator Tommy Tuberville (R-AL) penned an op-ed in Fox Business opposing legislative efforts to cap credit card interest rates. In the piece, Senator Tuberville argues limiting the percentage banks and credit card companies can charge on outstanding credit card balances will reduce access to credit for the people who need it most.
Excerpts from the op-ed can be found below, or you can read the full op-ed here on Fox Business.
“I’m old enough to remember the dark days of the 1970s. During those years, many city governments put in place laws restricting the amount landlords could charge tenants for rent. This was great for people living in an apartment they liked, but good luck to young people looking for a place to start out or to a family that just moved into town.
It’s economics 101. Caps on rent rates in Democrat-controlled cities disincentivized developers from building housing in those areas. Housing shortages abounded as a result. When government gets in the way of market forces, consumers pay the price. The same will be true if a cap is placed on credit card interest rates.
Limiting the percentage banks and credit card companies can charge on outstanding credit card balances will reduce access to credit. Card issuers must be compensated for the risk they take on when extending credit to cardholders. If rates are capped, card companies will stop issuing cards to less credit worthy individuals. It’s that simple.
A young person entering the workforce, a hardworking mom who fell on hard times and has a low credit score as a result, a family new to our shores who went through our immigration system legally, and many others will be out of luck when it comes to getting a credit card. Those with scores in the 800s will be just fine, but much of the country – including millions of financially responsible Americans – will lose access to vital credit.
In a world with credit card interest rate caps, financially comfortable individuals with established credit histories will be the only Americans able to have a credit card. That’s not right.
The free market is incredibly efficient at setting the cost of goods and services based on the forces of supply and demand. Innovation – not big government control – is the most effective market disrupter that can lead to lower prices for consumers and economic growth.”
Senator Tommy Tuberville represents Alabama in the United States Senate and is a member of the Senate Armed Services, Agriculture, Veterans’ Affairs, and HELP Committees.