Noah Smith, Columnist

Sanders, Ocasio-Cortez Chose the Wrong Interest-Rate Cap

Their credit-card plan could hurt more than help.

May 13, 2019 at 11:00 AM UTC

Noah Smith is a former Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

Limit them, don’t kill them.
Photographer: Daniel Acker/Bloomberg

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Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders have called for new legislation to cap credit-card interest rates. It’s not necessarily a bad idea, but there’s a better way to do it.

The legislators’ proposal would impose a 15% ceiling on rates. This probably wouldn’t crush the U.S. credit card industry, where the average rate on interest-bearing accounts is around 17%: