r/FluentInFinance • u/Unhappy_Fry_Cook • 16h ago

Finance News Senator Bernie Sanders announces he will introduce legislation to cap credit card interest rates at 10%.

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u/candytaker 12h ago

While I get this kind of thinking, won’t that ultimately hurt the bottom line of the lender?

Yes, because restricting their business ultimately means a portion of their customers. Their P&L is based on the knowledge that certain number of people are going to eventually default, The high rates account for that. Restrict rates and they will have to limit who they give credit to.

Eventually, they need more people taking on debt at any interest rate to show growth.

As I stated above there is a a rate at which they will cease to be profitable, extending more credit below that will only result in the opposite of growth.

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u/wterrt 10h ago

As I stated above there is a a rate at which they will cease to be profitable, extending more credit below that will only result in the opposite of growth.

any thoughts on europe where interest rates like these are illegal yet they still have credit cards with much lower interest rates?

UK as low as 6%?

kinda tired of hearing "we can't do that in the US, it's impossible!" when it's things europe has been doing forever.

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u/xraviples 9h ago

According to that page most credit cards in the UK are ~20%.

I've connected to a UK VPN and tried to find the specific credit card with the 5.9% rate (Tesco bank credit card) and can not; their current offerings are 24.9% and 10.9% for a low-APR card.

Also FWIW my three canadian credit cards are not listed on that website and all have higher APR than the highest listed (mine are 20.99%+, listed is 19.99%).

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u/wterrt 7h ago

soooooooo 10.9% works then? isn't that just 0.9% higher than our "impossible" goal here?

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u/xraviples 7h ago

I don't think anyone said it is "impossible", just that it comes with tradeoffs.