Credit Card Cap Proposal Concerns

DakCU calls on credit union leaders to take action to protect access to affordable credit.

​The Dakota Credit Union Association (DakCU) is urging Dakota credit union CEOs to take action against a federal proposal that would cap credit card interest rates at 10 percent, warning that the measure would significantly restrict access to affordable credit and harm the very consumers it aims to protect.

Over the weekend, DakCU alerted credit union CEOs to a federal proposal that would impose a one-size-fits-all credit card rate cap and outlined the serious unintended consequences such a measure could have for consumers, credit unions, and the broader economy. Now, DakCU is calling on credit union leaders to take action by signing onto a letter led by America’s Credit Unions through its Grassroots Action Center.

Why Credit Unions Oppose the Proposal
While intended to address high interest rates, a 10% cap would make it economically unfeasible for financial institutions to offer credit cards to most consumers. Industry research shows nearly 90% of current cardholders, 175 to 190 million Americans, would effectively lose access to credit, particularly those with credit scores below 740.

Credit unions also emphasize that credit card pricing is directly tied to risk, operating costs, and regulatory requirements. A federally mandated rate cap ignores these realities and removes the flexibility credit unions need to responsibly serve a diverse membership. Rather than lowering costs for consumers, the cap would force many institutions to pull back or eliminate credit card programs altogether, limiting choice and competition in the marketplace and leaving consumers with fewer safe, regulated options.

Credit unions warn that reduced access would hit low- and moderate-income households, young adults, and small businesses the hardest. Consumers shut out of regulated credit would likely turn to higher-cost, higher-risk alternatives such as payday lenders and unregulated online lenders.

Credit Unions Already Lead on Affordability
Credit unions operate under a not-for-profit, cooperative model and consistently offer some of the lowest credit card rates in the marketplace, often roughly half the average APR charged by banks.  That difference translates into real, measurable savings for working families and reflects credit unions’ long-standing mission as consumer protectors.  

According to Scott Simpson, President and CEO of America’s Credit Unions, a proposed 10% interest rate cap would undermine that mission by limiting access to credit rather than improving affordability.

“Credit unions were founded as the original consumer protectors, and that mission still shows up in the real-world value they deliver every day. Their members consistently benefit from the lowest rates in the marketplace, roughly half the average APR charged by other issuers, which translates into meaningful, measurable savings for working families. That’s affordability people can feel in their financial well-being. A 10% interest rate cap would be devastating for credit union members. While we appreciate the President's desire to increase affordability, the plain truth is that capping rates at 10% does not make credit more affordable, it makes it unattainable for millions of working Americans because financial institutions will not be able to offer credit cards to most consumers at a 10% rate. We will continue to work to ensure this policy does not harm the very people the President intends to protect.” 

Legislative Context and Next Steps
Legislation introduced by Senators Bernie Sanders and Josh Hawley, along with recent comments from President Donald Trump, have renewed attention on the issue. America’s Credit Unions has successfully pushed back against similar provisions in recent legislation and continues to advocate for policies that preserve access to safe, affordable credit.

DakCU will continue working with America’s Credit Unions to ensure lawmakers understand that protecting consumers means preserving access to credit—not eliminating it.

Click here to personalize an email to your U.S. Senators and U.S. Representative, urging them to NOT sign on to legislation that would enact arbitrary price controls or support any amendments to add that language.