Simpson illustrates unintended consequences of 10% rate cap

January 13, 2026

In light of continued discussion about credit card interest rate caps, a message to members of Congress sent Monday shared data illustrating how a 10% APR cap on credit unions would unintentionally harm consumers, including many credit union members who depend on that source of credit.    

America’s Credit Unions President/CEO Scott Simpson urged lawmakers to take several key points into account, while also acknowledging the need for solutions to strengthen consumers’ financial resiliency and address affordability issues:

  • Federal Reserve data shows that 37% of Americans would struggle to cover a $400 emergency expense from their income or savings alone. Crucially, of those households, over 40% said they would cover a $400 emergency by borrowing on a credit card;
     
  • 47 million “subprime” borrowers (effectively one-third of consumers) would be cut off from mainstream credit cards under a 10% interest rate cap;
     
  • Consumer spending is the engine of the American economy, accounting for roughly 70% of U.S. GDP. Purchase volume on consumer credit cards totaled $3.6 trillion in 2024, up from roughly $2.2 trillion in 2020, and accounted for 12% of the U.S. economy. Retailers of all sizes, including small businesses on Main Street, would see a significant decline in sales under a rate cap as consumers lose access to affordable credit; and
     
  • Credit unions have a proud legacy as leaders in affordable financial services, consistently offering lower rates and fees to their member-owners, including on credit cards. As of January 2026, credit unions’ average interest rate for basic classic credit cards stood at 12.87% compared to banks’ average interest rate of 16.07%. This trend holds true for most other credit cards, including credit cards associated with special rewards programs.

“The bottom line is that credit unions have a proven track record of offering affordable financial services to their 145 million members, many of which fall into subprime and underserved categories,” wrote Simpson. “With these facts, we are firmly opposed to any effort to create an arbitrary rate cap of 10% on credit cards that millions of people rely on to make ends meet. We stand ready to work with Congress and the Administration on policies that will enhance consumers’ financial well-being.”

America's Credit Unions will continue to engage with the administration and Congress to emphasize how cooperative finance supports consumers' financial well-being. Strategic outreach is underway and resources are available for credit union leaders to break down this nuanced topic further.