U.S. Rep. Maurice Hinchey is calling for a proposal that would limit interest rates on credit card transactions.
The Interest Rate Reduction Act would limit rates on credit cards and other loans at 15 percent, a move Hinchey believes would keep banks and financial institutions from increasing charges without proper justification.
“Many hardworking Americans are using credit cards to make ends meet in this recovering economy, but credit card companies are finding new ways to squeeze the middle class despite significant reforms in the last Congress,” Hinchey said in a statement.
Under the plan, lenders would operate by the same rules as credit unions, which have been forbidden from raising interest rates past this level for more than 25 years. The Federal Reserve could allow higher rates, but only under special circumstances that would be specified in the bill.
Last year, lawmakers passed regulations that successfully limited transaction fees on debit card purchases. The move was lauded by consumer activists and merchants, who wanted to bring more savings to those who chose debit over credit cards for payments.