10 Percent Credit Card Interest Rate Cap Act
- Bill Number
- H.R. 1944
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-03-06: Referred to the House Committee on Financial Services.
- Last Updated
- 2026-04-17T20:14:34Z
AI-Generated Summary
Purpose
The "10 Percent Credit Card Interest Rate Cap Act" (H.R. 1944) aims to protect consumers from high credit card interest rates by imposing a nationwide cap on annual percentage rates (APRs) for credit cards at 10%, including all finance charges. This temporary measure seeks to make credit more affordable while preventing evasion through fees.
Key Provisions
- Interest Rate Cap: The APR for credit extended via credit cards cannot exceed 10 percentage points, covering all finance charges (such as interest and certain fees disclosed under the Truth in Lending Act).
- Anti-Evasion Rules: Fees not classified as finance charges (e.g., some annual or late fees) cannot be used to bypass the cap, and their total cannot exceed the amount of finance charges assessed.
- Penalties for Violations: Knowingly charging rates or fees above the cap results in forfeiture of all interest, finance charges, or fees on the obligation. Violators are subject to civil penalties under section 130 of the Truth in Lending Act, which can include actual damages, statutory damages up to $5,000 per violation, and attorney fees.
- Borrower Recovery: Consumers who pay excessive rates or fees can sue to recover the full amount paid, within 2 years of the last usurious (excessive interest) collection, in a debt-like action.
- State Law Preemption: The cap does not override state laws that offer stronger consumer protections.
- Duration: The provisions are temporary and automatically expire on January 1, 2031, reverting the law to its prior state.
Significant Changes to Existing Law
- Amends section 107 of the Truth in Lending Act (15 U.S.C. 1606) by adding subsections (f) and (g) to establish the 10% cap, anti-evasion measures, penalties, and recovery options—none of which existed before.
- Updates section 130(a) of the Truth in Lending Act (15 U.S.C. 1640(a)) to explicitly include violations of the new cap under its penalty framework.
- Introduces a sunset clause to repeal these additions after 5 years (from the bill's potential enactment in 2025), ensuring the changes are not permanent without further congressional action.
Potential Impacts
- On Citizens: Could reduce borrowing costs for millions of credit card users, potentially lowering debt burdens and improving financial stability, especially for low-income households. However, it might limit credit availability if issuers tighten lending standards.
- On Government Agencies: The Consumer Financial Protection Bureau (CFPB) and other regulators would enforce the cap through existing oversight of the Truth in Lending Act, possibly increasing complaint investigations and enforcement actions without needing new resources.
- On Credit Card Issuers and Financial Institutions: May decrease revenue from interest and fees, prompting adjustments like higher minimum payments, reduced rewards programs, or less credit offered to higher-risk borrowers.
- On International Relations: Minimal direct impact, though U.S. credit card companies with global operations might face indirect effects on competitiveness if the cap influences international lending practices.
Main Stakeholders Affected
- Consumers: Primary beneficiaries, gaining protection from high rates but potentially facing reduced credit access.
- Credit Card Issuers and Banks: Heavily impacted, as they must comply with the cap, which could squeeze profits and alter business models.
- Financial Regulators (e.g., CFPB, Federal Reserve): Responsible for enforcement, monitoring compliance, and handling disputes.
- State Governments: Can maintain or enact stricter rules, potentially leading to a patchwork of protections.
- Consumer Advocacy Groups and Legal Aid Organizations: Likely to support and litigate under the new recovery provisions.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens consumer remedies under the Truth in Lending Act by adding specific usury-like protections (usury refers to charging illegally high interest), but limits actions to 2 years, balancing enforcement with finality for lenders. The anti-evasion clause could lead to litigation over fee classifications.
- Constitutional: No apparent challenges, as it regulates interstate commerce (credit cards) under Congress's commerce clause authority; it respects state protections, avoiding federalism issues.
- Political: Represents a bipartisan consumer protection effort (introduced by Reps. Ocasio-Cortez and Luna), but could spark debate between pro-consumer advocates and the financial industry, which might lobby against it for stifling innovation. The sunset provision allows for future review, potentially making it a trial for permanent reform.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Ocasio-Cortez, Alexandria [D-NY-14]
Cosponsors (1)
Rep. Luna, Anna Paulina [R-FL-13]
Recent Actions
- 2025-03-06: Referred to the House Committee on Financial Services.
- 2025-03-06: Introduced in House
- 2025-03-06: Introduced in House
Bill Versions
- 10 Percent Credit Card Interest Rate Cap Act — issued 2025-03-06 — PDF (3 pages)