Senator Sanders Backs Trump Idea for Credit Card Interest Rate Cap

Default rates on credit card debt have gone through the roof, and it is no surprise considering the outrageous interest rates that credit cards charge.

Most people are facing interest rates of nearly 30%, ironically, about the same amount loan sharks would charge on the street.

Trump has proposed capping rates at 10%, and Senator Bernie Sanders (I-VT) is backing the idea, including if legislation comes before Congress on this matter.

Cap It

Sanders just about blew up X when he posted his support of the idea.

Sanders posted, “Donald Trump proposed a 10% cap on credit card interest rates. Great idea. Let's see if he supports the legislation that I will introduce to do just that.”

Currently, the average credit card interest rate is 21.5%, which is utterly ridiculous.

For people just starting out who have to use credit, they are barely able to make the minimum payments, which means their interest is likely outpacing their payments.

It takes very little time to get underwater when that is happening, which results in defaulting and often puts them on the road to bankruptcy.

Moody’s Analytics Mark Zandi stated, “High-income households are fine, but the bottom third of U.S. consumers are tapped out. Their savings rate right now is zero.”

The industry, of course, is stating that capping the interest rate could hurt lower-income Americans, which is utterly ridiculous.

If interest rates are more reasonable, people will be able to make payments and pay down their debt rather than go in the red even when they are making payments.

Just look at the default rate by Capitol One as an example, which is a staggering 6.1%. Over $60 billion in debt was written off by creditors last year, and there is another $37 billion that is at least a month late.

Last year, for the first time in history, Americans collectively had more than $1 trillion in credit card debt.

These people are pigs, but they are not alone at being at fault. Far too many people rack up debt when they cannot pay, especially around Christmas time.

In addition to having more reasonable credit card rates, people need to live within their means, below their means, actually, so they can start to save.

This is a two-way street, so I would even go so far as to recommend making financial planning classes mandatory in high school, as many kids get credit cards when they first enter college, starting them down that rabbit hole from when they never recover.