Let’s start with this shocking number: 88%. That’s how many Missourians will lose their credit cards entirely if a bill introduced by Sen. Josh Hawley becomes law, according to a study from the Electronic Payments Coalition.
Missouri’s senior Republican senator is co-sponsoring a bill with Independent Vermont Sen. Bernie Sanders, who affiliates with Democrats, capping the credit card annual percentage rate — including interest and fees — at 10%. They say politics makes for strange bedfellows. It turns out terrible and dangerous policy ideas take that to the extreme.
There’s no way to sugarcoat it: this bill is draconian for Missourians. There are roughly 4 million credit card holders in Missouri, and as many as 3.5 million of those Missourians will see issuers cut off their credit cards if this bill become law. Why? Because there will be no way for banks and card issuers to manage the risk of offering an unsecured line of credit to customers in the form of a credit card. The 10% ceiling proposed by Hawley and Sanders means credit card issuers can only offer credit cards to those who have nearly perfect credit and high incomes.
The number of credit cards that would disappear in Missouri skyrockets when you look at consumers with credit scores of 740 and below. Issuers simply would not be able to take the risk and would abandon credit cards, which many Missourians rely on to pay for basic goods like gas, food and utilities. Instead of helping consumers they claim to care about, Hawley and Sanders are literally making a credit card a luxury that few Missourians can use.
Where will those without high credit scores and income go? Predatory lenders and fly-by-night credit operations whose products have been proven to lock consumers in cycles of poverty for generations. Instead of lifting those consumers up, this bill removes a tool that could help them find stronger financial footing. Former FDIC Chairwoman Jelena McWilliams, who immigrated to the U.S. with nothing, has said that a bank-offered credit card was her first step into financial security as an American. The same is true for millions more who use their credit cards to improve their financial well-being over the course of time.
I have no doubt the senators mean well with their bill, but intention and outcome are two dramatically different things. In this case, the outcome will be the loss of credit card access for almost 90% of Missourians. Look at the card in your wallet — do you want it to disappear? Tell Sen. Hawley to drop his dangerous and misguided piece of legislation.
MBA President and CEO
