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Credit Cards and Interest Rates – How Congress Failed American Consumers

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Credit Cards and Interest Rates – How Congress Failed American Consumers

credit cardsIt’s been more than a year since Congress passed what seemed like expansive credit card reform and plenty of Americans still feel like they’ve been getting the financial shaft.

Since taking effect February of last year, the credit card reform law simply hasn’t gone far enough to protect consumers. In fact, it seems more like lawmakers simply rolled over for the nation’s largest credit card companies.

Credit card debt is the hardest to dig out of, primarily because of high interest rates. Simply paying the minimum, which many Americans still can’t afford, will often only cover the interest alone, keeping consumers with a constant balance to perpetually pay off.

What’s particularly frustrating is the fact that Congress squandered the chance to provide consumers with at least some measure of much-needed relief at the height of the worst financial crisis since the Great Depression, by failing to impose a cap on interest rates.

In 2009, the Senate only mustered 33 of the necessary 60 votes needed to to impose a 15 percent interest rate cap on credit cards. This was a colossal failure for lots of reasons, aside from the obvious fact that 15 percent is still way too high.

First, you have to consider that for most private companies, operating on a profit margin of more than 15 percent is not only stellar, but unheard of in many industries. Yet, long-term stability isn’t much of a consideration in Wall Street, where quarterly earnings reports trump all else. According to Tampa Bay Online, Visa’s profit margin is 37 percent, 33 for MasterCard and 22 percent for J.P. Morgan Chase.

The average credit card interest rate is around 15 percent. With such high interest rates and laughably high profit margins for these companies, do you still think Congress was looking out for your best interests?

Capping interest rates would have put real teeth into a law that we now see was little more than the all-too-familiar dog and pony show that passes for American politics these days.

Originally published on

  • Sbh_home

    Absolutely.  Volcker was directly responsible for the removal of usury ceilings.  After he allowed credit card rates to skyrocket, Volcker never reset them.

  • Anonymous

    In my opinion it’s one of the worst tragedies that this country has had to face – just think of the families that could potentially dig themselves out of debt if CC companies were forced to lower interest rates to reasonable levels well under 12 to 15%. The fact that these companies are being allowed to issue credit-shark level rates, needlessly driving families into bankruptcy, is a sign that no one on the hill has the best interests of American families in mind.

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