1 of 2 | Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Bernie Sanders, I-Vt., propose allowing states to lower the credit card interest rate even further. File Photo by Monika Graff/UPI | License Photo
May 9 (UPI) -- Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez teamed up Thursday to unveil legislation seeking to cap credit card interest rates at 15 percent, calling high rates a "debt trap."
During an announcement streamed on Twitter, Ocasio-Cortez, D-N.Y., accused banks of acting as "modern-day loan sharks." Sanders, I-Vt., called on Congress to "stand up for ordinary people."
"There is no reason a person should pay more than 15 percent interest in the United States," she tweeted. "It's a debt trap for working people + it has to end."
The average annual percent rate was 17.73 percent in April, a record high, CreditCards.com reported. The average maximum rate was 24.99 percent and the median was 21.36 percent.
"Let's be clear what we're talking about: We're talking about economic brutality," said Sanders, a Democratic presidential candidate. "We are talking about some of the most powerful people in the world, people who make millions and millions of dollars a year, and banks that make billions of dollars a year in profit.
"And they see a real profit center in going after desperate people ... who cannot afford the basic necessities of life."
Under the proposal, the federal government would impose a 15 percent cap, while states would be free to impose their own lower limits. The U.S. Postal Service also would be permitted to start offering savings and checking accounts to customers.
A cap on credit card interest rates isn't a new idea. Congress placed a 15 percent ceiling on credit unions nearly 40 years ago, a number they have since raised a number of times.
"This isn't anything radical, because we had these laws for a very long time," Ocasio-Cortez said.
The proposal is likely to meet opposition from banks, which made some $180 billion in interest and fees in 2018.
"This specific proposal will only harm consumers by restricting access to credit for those who need it the most and driving them toward less regulated, more costly alternatives," said Jeff Sigmund, a spokesman for the American Bankers Association.