Credit Card Interest Rates Capped at 10% Under New Bill, Set to Expire in 2031

The "10 Percent Credit Card Interest Rate Cap Act" sets a hard limit on how much interest credit card companies can charge. Let's break down what that means for you.

Capping the Rates

This bill puts a 10% ceiling on credit card interest rates, including all those extra finance charges. And it's not just about the advertised rate. Section 2 of the bill specifically says companies can't sneak in extra costs through other fees. If they try? They lose all the interest, not just the extra bit. If you've been overcharged, you can sue to get back all the interest, finance charges, and fees you paid, as long as it's within two years of the last overpayment.

• Real-World Example: Imagine you're a freelance photographer juggling equipment costs and client payments. High credit card interest can make it tough to manage cash flow. This bill could mean the difference between staying afloat and sinking further into debt.

The Fine Print

Creditors who knowingly break this rule face penalties under existing law, though the bill doesn't create new ones. States can also step in with tougher rules if they want, meaning your state could offer even more protection. One key detail: This whole setup expires on January 1, 2031. Think of it like a trial run to see how this cap impacts both consumers and the credit market.

Potential Challenges

While this sounds good for consumers, there are practical challenges. Credit card companies might try to make up for lost interest by jacking up other fees. It could also become harder for people with lower credit scores to get approved for cards, as companies might see them as too risky under these rules. It will be important to watch how credit card companies adjust to these new rules.