The article argues that capping credit card interest rates could lead to unintended consequences that harm working families and small businesses by reducing supply.
The article discusses the concerns of affordability that many Americans face regarding essential expenses such as healthcare, housing, groceries, and utilities. In light of these challenges, policies aimed at lowering costs, such as the proposed 10 percent cap on credit card interest rates by President Trump and Republicans in Congress, are being debated. While these policies are driven by a desire to alleviate financial strains on families, the article warns that such price controls may have negative repercussions.
The piece highlights how historically, government-imposed price caps have often led to unintended consequences. Specifically, it asserts that imposing a limit on credit card interest rates could reduce the availability of credit, leading to a decrease in competition in the market. The article asserts that when an artificially low price is mandated in a competitive environment, the supply of that good or service typically diminishes, which could push credit out of reach for those who rely on it for essential purchases.
Furthermore, the author encourages lawmakers to consider these potential drawbacks before enacting such policies. The warning extends to the broader implications on working families and small businesses, who depend on credit for day-to-day operations and emergencies. By re-evaluating the consequences of price controls, the article emphasizes the importance of ensuring that measures intended to protect consumers do not inadvertently exacerbate their financial struggles.
