Interest Rates Caps on Credit Cards
I started working for Associates National Bank at age 22. Within the first 30 days, a senior executive asked me what I thought of the ethics of the business. I was confused so he elaborated. He pointed out that the optimal credit card user is a high volume purchase (good interchange income), that revolves their balance (good interest income), who is loyal to the card issuer (rate insensitive), and pays their credit card bill late 4 times per year (fee income without collections expense). I come from the general (not absolute) school of thought that most financial services products are transparent in their disclosures and understood by consumers. Therefore have noticed and thought about the proposed legislation to cap interest rates at 10% for five (5) years. Credit card interest rate caps have become a hot topic in recent political discussions, with an unlikely duo - Senators Josh Hawley and Bernie Sanders - proposing legislation to cap rates at 10% for five years. This bipartisan effo...