A House subcommittee voted Wednesday to impose an adjustable cap on credit card interest rates that would, if in effect today, set top rates at 13.8%--almost five points below the prevailing rates.
Along straight party lines, the Democratic-run Banking, Finance and Urban Affairs subcommittee on consumer affairs and coinage approved a ceiling of eight percentage points above the yield on one-year Treasury securities. The rate would be adjusted quarterly.
The ceiling, opposed by the credit card industry, now goes to the full committee.
"Anyone who can't make a profit by borrowing money at 5.8% and lending at 13.8% should find another line of work," said Rep. Frank Annunzio (D-Ill.), the subcommittee chairman.
Notes Other Rates Decline
Annunzio noted that credit card interest rates have hovered at 18%, while other interest rates have declined over the last five years.
He and others cited Visa's attempt last week to mobilize criticism of a new American Express "Optima" credit card offered at 13.5% as proof that a federal cap is necessary. A March 11 telegram from Visa President Charles Russell urged banks to "rethink your position in offering American Express products" and to call the company to voice opposition.
David Hunt of the American Bankers Assn. argued that a federal attempt to regulate interest rates "would lead to a contraction in the supply of credit card credit."