House bill aims to cap interest rates
OLYMPIA,Wash. -- Here's a figure that will get your attention: the average credit card interest rate in this country right now is 14 percent.
Quite a few people are paying a whole lot more, as high as 32 percent. And one state lawmaker says it's time to put the lid on these rates.
Washington state has a usury law -- a law that limits interest rates. It's been around since we became a state and it caps interest rates at 12 percent.
So why are credit card companies charging so much more? Because the U.S. Supreme Court ruled states can't enforce their usury laws. But Rep. Kirk Pearson, R-Monroe, says in these tough economic times, it's time to change that.
Pearson's answer: House Bill 2195. If passed, it would limit the interest rate on credit cards to 12 percent or 4 percent above the treasury bill rate, whichever is higher.
Pearson says if the economy is ever going to recover, we've got to give people a break.
"So this is in my way of thinking this is kind of a stimulus for the real people who are struggling or losing their jobs. They need a break," he said.
Bankers say credit cards aren't the problem; it's the poor economy.
"Capping credit card rates will mean that many more people will not have access to credit at a time when they need it most," said Nessa Feddis of the American Bankers Association.
But people I spoke to like the idea of a rate cap.
"Oh, I like that better, much better," said Sonia Hampton. "It would be very helpful for the people who can't pay off the cards every month."
I think that makes sense. I'm not always a big fan of the government stepping in and telling people what they should and shouldn't do, but I think 18 percent, 19 percent on a loan is loan sharking as far as I'm concerned," said Jeff Magnotti.
If the U.S. Supreme Court has already ruled states can't enforce rate caps against out-of-state companies, is this bill much ado about nothing?
We asked Pearson, who said, "We have to do something." He contends it is an issue of state sovereignty and says he wants to push the issue.
More information:
Restriction on credit card interest rates proposed
House Bill 2195
Quite a few people are paying a whole lot more, as high as 32 percent. And one state lawmaker says it's time to put the lid on these rates.
Washington state has a usury law -- a law that limits interest rates. It's been around since we became a state and it caps interest rates at 12 percent.
So why are credit card companies charging so much more? Because the U.S. Supreme Court ruled states can't enforce their usury laws. But Rep. Kirk Pearson, R-Monroe, says in these tough economic times, it's time to change that.
Pearson's answer: House Bill 2195. If passed, it would limit the interest rate on credit cards to 12 percent or 4 percent above the treasury bill rate, whichever is higher.
Pearson says if the economy is ever going to recover, we've got to give people a break.
"So this is in my way of thinking this is kind of a stimulus for the real people who are struggling or losing their jobs. They need a break," he said.
Bankers say credit cards aren't the problem; it's the poor economy.
"Capping credit card rates will mean that many more people will not have access to credit at a time when they need it most," said Nessa Feddis of the American Bankers Association.
But people I spoke to like the idea of a rate cap.
"Oh, I like that better, much better," said Sonia Hampton. "It would be very helpful for the people who can't pay off the cards every month."
I think that makes sense. I'm not always a big fan of the government stepping in and telling people what they should and shouldn't do, but I think 18 percent, 19 percent on a loan is loan sharking as far as I'm concerned," said Jeff Magnotti.
If the U.S. Supreme Court has already ruled states can't enforce rate caps against out-of-state companies, is this bill much ado about nothing?
We asked Pearson, who said, "We have to do something." He contends it is an issue of state sovereignty and says he wants to push the issue.
More information:
Restriction on credit card interest rates proposed
House Bill 2195