Price Controls on Credit Cards Would Backfire on American Families

A new proposal to cap credit card interest rates at 10% would not make credit cheaper. It would make credit disappear. According to a new study, nearly 90% of Americans would lose access to credit cards entirely if Washington imposes a one-size-fits-all rate cap.

That is not consumer protection. It is a credit shutdown.

A new analysis from the Electronic Payments Coalition finds that 175 to 190 million Americans would effectively lose their credit cards under a 10% annual percentage rate cap. Any borrower with a credit score below roughly 740, well above the national average, would see their card closed or their credit limit slashed.

What the study shows

The numbers are stark:

• 82–88% of existing credit card accounts would be closed or severely restricted

• Nearly every account tied to a credit score below 740 would disappear

• All remaining cardholders, even those with high credit scores, would face lower limits, tighter standards, and reduced or eliminated rewards

• Low-income households, young workers, and small businesses would be hit first and hardest

  
  

The average American credit score is about 715. For younger Americans, it is much lower. Gen Z borrowers average between 667 and 678, depending on the scoring model. Data from the Federal Reserve Bank of New York shows average scores of 658 for low-income Americans and 735 for middle-income households.

Under a 10% cap, most of those borrowers would be locked out.

Who loses when credit disappears

Credit cards are not a luxury for millions of Americans. They are a basic financial tool.

For young adults, credit cards are often the first step into the financial system. They help build a credit history needed to rent an apartment, buy a car, or qualify for a mortgage. Cutting off access delays that progress and punishes people for having short credit histories.

For low- and moderate-income families, credit cards serve as a financial backstop for emergencies. When a car breaks down or a medical bill hits, access to regulated credit matters. Eliminating that option does not eliminate the expense.

Small businesses would also feel the damage immediately. Many entrepreneurs rely on personal credit cards to manage inventory, cover short-term costs, and bridge cash flow gaps. Restricting revolving credit would limit growth and strain day-to-day operations, especially for minority- and women-owned businesses.

Price controls do not lower costs

Supporters of a rate cap argue it would protect consumers. History says otherwise.

When the government imposes price controls, access shrinks. Costs do not vanish. They are pushed into less transparent and higher-risk channels. The EPC study warns that consumers shut out of credit cards would likely turn to payday lenders, title lenders, pawn shops, and unregulated online lenders that are often exempt from rate caps and consumer protections.

Even borrowers who manage to keep a card would see it become far less useful. Lower limits and tighter underwriting would make it harder to manage emergencies or smooth household spending, especially for families living paycheck to paycheck.

A bipartisan mistake

Last year, Bernie Sanders and Josh Hawley introduced legislation to cap credit card APRs at 10%. More recently, Donald Trump voiced support for a cap.

Good intentions do not change bad outcomes. A flat, government-imposed rate ignores risk, credit history, and market realities. The result is predictable: fewer options, less access, and more financial stress for the very people policymakers claim to help.

The bottom line

A 10% credit card rate cap would not rein in big banks or punish lenders. It would erase credit access for nearly 90% of Americans.

That is not reform. It is a policy choice that would weaken household finances, hurt small businesses, and push millions toward riskier forms of borrowing. Congress should reject it.