Credit cards could vanish. Like, just disappear. Poof. Gone. Up in smoke.
Or so I saw in the news. You can’t believe everything you read, but in this case, I am hopeful.
On January 12, reporter Peter Gratton used this headline on Investopedia.com:
Four-Fifths of Credit Card Accounts Could Vanish Under Trump’s Rate Cap, Experts Say
I happen to have five credit card accounts, and I would be pleased as hell if four of them vanished. Assuming the owed balance also vanished. Because I’m very much afraid that’s the only way those balances will ever disappear.
According to his Investopedia bio, Mr. Gratton “views his work at Investopedia as an extension of his lifelong role as an educator, whether as a professor, consultant, scholar, writer, or editor. He possesses a knack for demystifying complex topics without losing nuance.”
Like Mr. Gratton, I like to demystify complex topics, but admittedly, I sometimes lose the nuance.
In his article, Mr. Gratton quoted a post by our President:
“We will no longer let the American Public be ‘ripped off’ by Credit Card Companies that are charging Interest Rates of 20 to 30%,” he said on Truth Social.
The President said he wants a mandate that credit card companies charge a maximum 10% annual percentage rate, as of today, January 20. The average percentage rate is currently about 21%.
But that’s easier said than done, as so many things are.
I had to chuckle at Mr. Gratton’s introduction.
President Donald Trump’s call to cap credit card interest rates sounds like relief for millions of Americans… But industry analyses suggest such a policy would mean up to 80% of credit card accounts could disappear altogether, cutting off the borrowers it’s meant to help.
Like I said, I wouldn’t mind if four of my five credit cards magically disappeared. Mr. Gratton suggests the credit card industry is meant to help me, but I suspect it’s actually meant to ransack my wallet.
Would this industry — helpful as it may be — really cancel my accounts, if they could extract only 10% interest from me each month? That sounds like the opposite of “helpful”.
If credit cards disappeared, I’m sure other folks would step up to provide loans to those of us who strive to spend more than we make. The Mafia comes to mind. Which is not so very different.
I don’t think the rates are going to drop today, January 20, however. As pleasant as that might be. I note that, in his social media post, the President used the word “we”.
“We will no longer let the American Public be ‘ripped off’…”
The friends he’s counting on to assist with this helpful (but unlikely?) change are the U.S. Congress. Not the most reliable or trustworthy friends. But it’s certainly more friends than I ever hope to have.
So what did Congress do? On January 13, Congress reintroduced the bipartisan ‘Credit Card Competition Act’, a bill that’s been knocking around the halls of Congress since last year, without making any progress. This bill doesn’t establish a cap on credit card percentage rates. Instead, it attempts to reduce the ‘swipe fees’ paid to Visa and Mastercard by businesses. So it would save businesses money, but wouldn’t necessarily save me any money.
It definitely wouldn’t reduce my monthly credit card payments.
But the bill has the enthusiastic support of the National Association of Convenience Stores. So there’s that to consider.
Underrated writer Louis Cannon grew up in the vast American West, although his ex-wife, given the slightest opportunity, will deny that he ever grew up at all. You can read more stories on his Substack account.