SEN BERNIE SANDERS: We need to cap credit card interest rates at 10%, Trump is right
We live in a nation of unprecedented wealth and income inequality — where a handful of billionaires are getting much richer while the working class falls further and further behind.
Just since Election Day, while millions of Americans are struggling to afford housing, food, electricity and healthcare, the three wealthiest people in America have become over $625 billion richer and are now collectively worth $1.3 trillion. Meanwhile, as a result of a rigged political system, billionaires now pay a lower effective tax rate than the average truck driver, teacher or nurse.
At the same time, Wall Street has never been more consolidated and powerful than it is today. Incredibly, just four Wall Street firms now manage roughly $38 trillion in assets — more than 120% of our annual GDP — and are major shareholders in over 95% of S&P 500 companies. Further, just five massive financial institutions led by JPMorgan Chase, Bank of America, American Express, Citigroup and Capitol One now account for nearly 70% of all credit card transactions and just two giant credit card networks (Visa and Mastercard) process well over 80% of credit card transactions.
With that enormous concentration of ownership, Wall Street has incredible impact over the prices, interest rates and fees we pay and the well-being of workers.
Within that reality, President Donald Trump went to Davos, Switzerland, on Jan. 21, to speak about his so-called "affordability agenda." Really? Is there anyone left in America who does not understand that Trump’s concern about "affordability" is nothing more than a flailing attempt to shore up his rapidly declining poll numbers?
Remember: This is a president who gave a front-row seat at his inauguration to Elon Musk, Jeff Bezos and Mark Zuckerberg, and who filled his Cabinet with more billionaires than any administration in American history.
This is a president who gave a trillion dollars in tax breaks to the top 1%, while throwing 15 million people off of healthcare and did nothing to prevent healthcare premiums from doubling, on average, for 20 million Americans.
This is a president who is working with Elon Musk and the other Big Tech billionaires to push AI and robotics on the American people, which will result in the loss of tens of millions of decent-paying jobs.
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But, I have to admit, there is one issue that Trump has identified that does make sense. He is right when he says that big banks are ripping off the American people with outrageously high credit card interest rates.
In 2024, credit card companies raked in more than $190 billion from interest and fees charging obscenely high interest rates, while bombarding Americans with roughly 3 billion solicitations. Today, as a result of their efforts to addict Americans into purchasing their high-interest plastic, Americans are drowning in a record $1.23 trillion in credit card debt.
Despite the fact that big banks can borrow money at less than 4% interest from the Federal Reserve, the average interest rate consumers are forced to pay for credit cards is nearly 24%. Yes. 24%.
In other words, while working-class Americans pay unconscionably high interest rates, Wall Street banks and their executives make out like bandits.
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When big banks charge 24% or 30% interest on credit cards, they are not engaged in the business of "making credit available." They are involved in extortion and loan sharking — squeezing working families who are already stretched to the breaking point. And that should not be acceptable in the United States of America.
So, what do we do about it?
Trump has proposed to cap credit card interest rates at 10%. That is a good idea. The problem is that his proposal would only last for one year and, in many instances, would end up costing consumers even more than they are paying right now.
Today, many big banks already lure people into signing up for their credit cards with introductory rates of 0% only to jack those rates up — sometimes to 36% — once the teaser period expires. In other words, what Trump is proposing is nothing more than a bait and switch.
If we are serious about helping working families, we need something real — not another scam.
That is why I introduced bipartisan legislation to cap credit card interest rates at 10% for at least five years. After that, I believe we should move toward a permanent cap of no more than 15% — similar to the long-standing statutory cap that credit unions have operated under since 1980.
Surprise, surprise. The billionaires on Wall Street and organizations representing the financial services industry like the American Bankers Association don’t like this idea (you can read their full statement here).
Jamie Dimon, the CEO of JPMorgan Chase, who we all know stays up nights worrying about the needs of working families, has come out strongly against this bill. I wonder why? Could it have something to do with the fact that last year, Dimon made $770 million in compensation while the bank he runs made $57 billion in profits charging Americans interest rates as high as 30%?
Mr. Dimon claims my bipartisan bill would restrict access to credit for low-income consumers. He has it backwards. This bill would restrict JPMorgan Chase and other financial behemoths from charging working-class Americans predatory credit card interest rates that trap them into a vicious cycle of debt.
Researchers at Vanderbilt University have estimated that my legislation would save the American people $100 billion a year in interest payments or about $899 a year.
How could this legislation benefit working families?
Let me give you one example.
A 28% interest rate on a credit card balance of $5,000 can cost a consumer as much as $11,000 in interest and take up to 24 years to pay off. With a 10% credit card interest rate cap, that consumer would save more than $7,200 in interest. The bank would still be able to make over $3,700 in profit off that consumer. It just wouldn’t be able to gouge them.
Let’s be clear: Charging outrageously high interest rates is not a financial service. It is usury — a practice condemned by every major religion on Earth.
In "The Divine Comedy," Dante reserved a special place in the Seventh Circle of Hell for people who charged usurious interest rates. Today, we don’t need the hellfire and the pitchforks, we don’t need the rivers of boiling blood, but we do need a national usury law that caps interest rates on credit cards at 10%.
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This is not a radical idea. Polling suggests that it is enormously popular. The American people — Democrats, Republicans and Independents agree: Credit card companies are ripping us off. It has got to stop.
This is also a matter of economic justice.
When Wall Street’s greed and recklessness brought the economy to the verge of collapse in 2008, causing millions of Americans to lose their homes, jobs and life savings, the taxpayers came to the rescue. The Federal Reserve gave these huge banks trillions of dollars in emergency loans at virtually zero interest. We bailed out the banks.
Now it’s time for Congress to stand with working families, end Wall Street greed and pass legislation that caps credit card interest rates at 10%.