The Case for a 10% Credit Card Interest Cap: A Step Toward Financial Freedom
The Case for a 10% Credit Card Interest Cap: A Step Toward Financial Freedom
When Bernie Sanders and Donald Trump agree on something, it tends to grab headlines. The proposed cap on credit card interest rates at 10% has sparked discussions across the political and financial spectrum, and as someone who values financial literacy and responsibility, I believe this policy is a move in the right direction.
Here’s why I Kellen Kash Cache Coleman as a "credit card deadbeat." Despite the negative connotation of the term "deadbeat," in this context, it describes someone who pays off their credit card balance in full and on time each month, thereby incurring no interest I support it and why I believe it’s a step toward helping low-income households break free from the vicious cycle of debt.
Understanding the Proposal
Currently, credit card interest rates range from 16% to as high as 36%, especially for subprime borrowers. For many, this creates a crushing financial burden that is hard to escape. By capping interest rates at 10%, this proposal would significantly reduce the cost of borrowing, making it easier for consumers to pay off their balances without falling into deeper debt.
Why as a credit card deadbeat, I Support the 10% Cap
1. Protecting Low-Income Households
High-interest credit card debt is a trap for many low-income families who use credit cards for basic needs or emergencies. A 10% cap provides relief and ensures that the cost of borrowing doesn’t spiral out of control.
2. Dave Ramsey Is Right
Dave Ramsey has long advocated for living without credit cards, pointing out that most people, regardless of income, don’t pay off their balances in full each month. The result? They get hit with high interest, wasting hard-earned money that could be invested or saved. A cap reduces this burden, but it also reinforces a critical point: low-income households should avoid using credit cards altogether.
3. Encouraging Financial Responsibility
Lowering interest rates can make borrowing less punitive for consumers who are trying to stay afloat. While I believe that credit cards should be avoided whenever possible unless a credit card deadbeat, this cap gives people a fighting chance to get out of debt and build better financial habits.
4. Combating Predatory Lending
The credit card industry thrives on risky loans and sky-high interest rates that disproportionately affect the most vulnerable. This cap would curb some of these predatory practices and shift the focus toward more ethical lending standards.
The Potential Challenges
While the 10% cap has many benefits, it’s not without potential downsides. Credit card companies might:
Tighten their lending standards, making it harder for low-income individuals to qualify for credit.
Reduce or eliminate popular perks like cashback, travel rewards, or introductory offers, which would stop a lot of us deadbeats from using cards.
Introduce higher fees to make up for lost interest revenue, which could also stop us deadbeats from using cards.
These changes could limit access to credit and shift costs in ways that are less obvious but still impactful.
The Bigger Picture: Credit Cards Are Not the Solution
Ultimately, we need to address a larger issue: credit cards are not a financial safety net. Low-income households should not rely or have credit cards for emergencies or everyday expenses. Instead, we should focus on:
Building Emergency Funds: Even small savings can prevent the need to rely on credit cards.
Financial Education: Teaching people how to budget, save, and manage money is critical to breaking the cycle of debt.
Community Support: Strengthening programs that provide resources and assistance for those in need can reduce dependence on credit.
As Dave Ramsey has repeatedly proven, most people can’t handle credit cards without paying interest. The system is designed to benefit lenders, not borrowers. A 10% cap is a step in the right direction, but the ultimate goal should be helping people avoid credit card debt altogether.
Conclusion
The proposed 10% cap on credit card interest rates is a policy I support because it protects consumers and encourages financial responsibility. But let’s be clear: the long-term solution lies in helping people break free from the credit card trap entirely.
By focusing on education, savings, and responsible spending, we can empower individuals to live without credit cards—and that’s the real path to financial freedom.
Kellen Coleman
"It’s A Family Business. It’s Different."