H.R. 1944: 10 Percent Credit Card Interest Rate Cap Act

The bill, known as the 10 Percent Credit Card Interest Rate Cap Act, aims to amend the Truth in Lending Act to establish a limit on credit card interest rates. Here are the key points of the proposed legislation:

Interest Rate Cap

The bill proposes that the annual percentage rate (APR) for credit card loans should not exceed 10%. This limit would include all finance charges that may apply to the credit extended through the use of credit cards.

Fee Limitations

The bill also states that any fees not categorized as finance charges cannot be used to circumvent the 10% interest rate limit. Additionally, the total of such fees must not exceed the total finance charges assessed on the credit.

Enforcement and Penalties

If any lender charges an interest rate or fee exceeding the proposed cap, this action would be considered a violation of the Truth in Lending Act. In such cases:

• The lender could forfeit all interest related to the loan.
• Borrowers who have paid more than the capped amount could recover the excess fees or interest paid. They would need to file a claim within two years from the date of the last payment made in excess of the cap.
• Creditors found to be in violation may also face additional legal provisions as defined in section 130 of the Truth in Lending Act.

Consumer Protections

The bill specifies that it does not override any state laws that provide greater consumer protections than those outlined in this legislation. This means states could enforce stricter rules regarding credit card interest rates if they choose to do so.

Technical Amendments