Two powerhouses, Bernie Sanders and Alexandria Ocasio-Cortez, come together to help put a cap on credit card interest. The two plan to cap the rates at 15%.
Last Tuesday, May 7, 2019, the two lawmakers announced a special plan that would finally target lending and card companies. According to CNBC, the proposal aims to curtail high-interest rates to a total of 15%. With the national average annual percentage hitting a whopping 17.73% for May of 2019, and with a median of 21.36%, this would significantly allow customers to be protected from abusive lenders.
Both of these democratic socialists understand that their newly unveiled plan would draw flak from the people. However, they remain steadfast and confident in their decision to help make a change via Congress.
Why the Change
Reducing interest rates to a more manageable 15% allows low-income people to manage their accounts and finances well.
CNN reports that Bernie Sanders state that Wall Street and other credit card companies are charging people with high-interest rates, making a profit over people and individuals who want to survive daily life. In the same way, Alexandria Ocasio-Cortez notes that 15% is a huge amount, with corporations and lenders profiting from this number.
In 2018 alone, USA Today reports that credit card companies were able to collect $180 billion in revenue, covering interest rates and other fees charged by credit card companies and other lending entities.
About the Plan
The new bill is called the Loan Shark Prevention Act. Under this program, consumer loans and credit cards would be capped at 15%. According to CNN, this bill would allow the Federal Reserve authority to grant a rate increase should the safety and soundness of the lender is under jeopardy. This bill also allows states to set a lower cap upon their discretion.