Credit card rate cap would be bad for consumers, especially those w/ low incomes

President Trump recently made news with a proposal to limit interest rates charged by credit card companies to 10%. This is similar to recent Congressional legislation from both parties. If enacted whether via independent executive action (likely unconstitutional) or via Congress these policies would have the same, negative impact on New Mexicans.

It’s not as if President Trump or a few members of Congress who have been pushing credit card interest rate limits are the first people to come up with the idea of government limiting interest rates. We know from years of accumulated observations of credit markets that when interest rate price caps are imposed, consumers lose access to high‐quality credit through the regulated financial system. For example:

• After a rate cap was imposed in Illinois, credit access for unsecured installment loans fell and the financial well-being of higher-risk borrowers worsened.
• A similar rate cap in Oregon was responsible for harming, not helping, consumers on average, and caused deterioration in the overall financial condition of Oregon households.
• In the United Kingdom, a rate cap on high-cost, short-term loans caused many families to lose access to loans, with those affected likely to be young, unemployed, and poor.
• And in Chile, a rate cap resulted in more than 80% of consumers being made worse off, including 200,000 families that were cut out of the credit market entirely, with young, poor, and less-educated families bearing the brunt of the burden.

These kinds of unnecessary and anti-market regulations will ultimately make life harder for tens of thousands of New Mexico families. Whether the effort is undertaken by the White House or Congress it must be rejected.