ICYMI: Warren at Hearing: Trump Would Have a "Strong Partner at the CFPB" to Enact His Proposed 10% Cap on Credit Card Interest Rates
Trump’s interest rate cap could be enforced by the CFPB to save Americans billions of dollars in interest payments
Washington, D.C. – At a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Elizabeth Warren (D-Mass.) highlighted how the Consumer Financial Protection Bureau (CFPB) has worked to bring down credit card prices and can help fulfill President-elect Trump’s promise to cap credit card interest rates at 10%.
According to the Federal Reserve, Americans are carrying a record $1.17 trillion in credit card debt. Since the Federal Reserve started tracking credit card interest rates in 1994, credit card companies have steadily increased interest rates to record highs. Even as the Federal Reserve has cut rates, credit card interest rates have remained higher than ever, with average interest rates nearly doubling over the last decade.
During the hearing, the Honorable Rohit Chopra, Director of the Consumer Financial Protection Bureau, highlighted the CFPB’s accomplishments in helping Americans struggling under the weight of credit card debt, like limiting late fees charged by credit card companies and cracking down on bad actors in the credit card market. Director Chopra emphasized that currently, Americans are paying an extra $25 billion a year in interest rates, compared to 10 years ago. If enacted, Direct Chopra confirmed that the CFPB would partner with President-elect Trump to enforce his plan to cap interest rates at 10%.
Senator Warren also thanked Chairman Brown for his years fighting for the dignity of work at the helm of the Senate Banking, Housing, and Urban Affairs Committee.
Transcript: Hearing to Examine Consumer Protection, Focusing on Protecting Workers' Money and Fighting for the Dignity of Work
Senate Banking, Housing, and Urban Affairs Committee
December 11, 2024
Senator Warren: Thank you, Mr. Chairman. Mr. Chairman, you have led this committee as a fierce fighter for consumers and someone who has pressed all of America to recognize the dignity of work. I speak for myself, and for millions of people across this country, to say we are grateful for your leadership. Thank you.
President Trump spoke to the concerns of millions when he said he would put a 10% cap on credit card interest rates. That is the kind of big structural change that will make a big difference to families across America. Over the last decade, giant credit card companies have jacked up interest rates to historic levels. Average interest rates have nearly doubled from 13% back in 2013, to 23% in 2024, now the highest on record. Much of that increase has been driven by credit card companies tacking on just a few extra percentage points of interest to pad their profits, to the tune of an average of about $250 extra, straight out of the pockets of every credit card holder in America, in just last year alone.
Director Chopra, thank you for being with us today. Just give us a quick summary about what the CFPB has been doing to help Americans struggling under the weight of credit card debt.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau: Well, we put into place some rules that will stop credit card exploitation of loopholes to the tune of billions of dollars a year in penalty fees. We're going to make it easier to switch. We're going to ensure that people can actually get those rewards they were promised, and so much more good.
Senator Elizabeth Warren: So, Director Chopra, let me ask you, would President-elect Trump's plan to lower interest rates to 10% do more to help unrig the credit card market? And if such a cap were enacted, does the CFPB have the expertise and the capacity to enforce that?
Director Chopra: Well, we certainly have the capacity to enforce it. We enforce other types of interest rate caps. And by the way, federal law already has an interest rate cap on credit cards offered by credit unions, and that seems to work just fine.
Senator Elizabeth Warren: All right, and let me just ask, because I had the rest of this, and that is, would a 10% cap on credit card interest rates, as the President-elect has proposed, would that help unrig the credit card system and help consumers across the country?
Director Chopra: Yes.
Senator Elizabeth Warren: Good, that's a short answer. Do you want to add any more?
Director Chopra: Well, I think there's room for debate on where to set the number, but certainly we have found that other rate caps have allowed the market to function. But as the market has grown more and more concentrated and that there's even more mega mergers potentially on the horizon, we need to make sure that those credit card companies aren't coordinating, even subtly, to jack up rates even higher.
Senator Elizabeth Warren: Okay, and that concentration means less competition?
Director Chopra: That's right, and I think that has contributed to these fat margins. We have found that Americans are paying an extra $25 billion a year, compared to 10 years ago, even when controlling for market interest rates.
Senator Elizabeth Warren: Wow, $25 billion. So let me ask, when the President-elect takes on the big credit card companies and lowers credit card interest rates to 10%, will he have a strong partner at the CFPB?
Director Chopra: Well, the CFPB will enforce the law as written, and that's exactly what we would do.
Senator Elizabeth Warren: Okay? So I understand that some people on Team Trump are trying to undermine the president-elect, billionaires who profit off of cheating people are begging him to “delete the agency.” They're asking President-elect Trump to go back on his promise of a 10% cap on interest rates, instead of putting billionaires' profits ahead of the needs of working people. The CFPB has been in the trenches fighting for working families for over a decade, and so far, it has forced Wall Street banks to return over $20 billion directly to families they cheated. Now, with a single move, President-elect Trump can smash that record, saving American families tens of billions of dollars in interest payments. And when he does that, he will have a strong partner at the CFPB. So I just want to say thank you, Director Chopra, for your extraordinary record of service to people all across this country. Thank you for all you've done.
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