A 10% APR price cap on credit card interest rates would be devastating to banks’ ability to ensure the availability and affordability of credit. In response, card issuers will be forced to tighten credit standards, scale back credit lines, reduce credit card rewards, and raise costs through higher annual and monthly maintenance fees. For consumers, many would lose their cards altogether – and the short-term flexible credit they provide. For other customers who can keep their cards, their costs would increase while their benefits would decrease.

While all consumers will be impacted – by higher costs, reduced access to credit, and reduced benefits – higher-risk borrowers with lower credit scores will bear the brunt of this misguided policy. If enacted, Senator Hawley’s rate cap amendment would drive consumers away from the highly regulated credit card industry. Instead, those consumers may be forced to turn to far riskier alternatives, including payday lenders, unregulated fintech lenders, and pawn shops for credit and will end up paying more for credit than they currently do. For example, in Missouri the average APR for a payday loan is 527%.

Protect consumers’ access to affordable credit and urge your lawmakers to oppose this policy and any attempt to add it to unrelated legislation.