Every policy cycle has its greatest hits. One of them is the idea that if credit card interest rates are too high, Congress can simply cap them and move on. Problem solved. This time, the idea has surfaced and resurfaced most recently during President Trump’s remarks at the World Economic Forum in Davos, Switzerland, calling for a one-year, 10% cap on credit card interest rates.
On paper, it sounds consumer-friendly. In practice, credit unions generally see a very different outcome.
That’s why America’s Credit Unions and the Defense Credit Union Council didn’t wait to respond. The message was clear: a one-size-fits-all 10% cap may be well-intentioned, but it risks doing real harm to the people it’s supposed to help.
Credit Unions Are the Model, Not the Problem
Scott Simpson, President and CEO of America’s Credit Unions. While credit unions share the goal of making life more affordable, Simpson warns that a government-induced 10% cap would likely restrict access to affordable products for families who need them most.
Instead of shrinking credit, Simpson argues Congress should focus on expanding access to institutions that already deliver affordability and financial stability to more than 145 million Americans: credit unions.
There is already a proven, market-based model delivering affordability at scale. It doesn’t rely on blunt caps or unintended consequences. It relies on mission-driven institutions pricing credit to serve people.
A one-size-fits-all rate cap may sound decisive. But for military families and working Americans, it risks turning ‘affordable credit’ into ‘no credit at all.’ And that’s a solution nobody should be eager to deploy.
Credit Unions Are Not Credit Card Giants
One of the biggest problems with the rate-cap conversation is that it treats all lenders as if they operate the same way. They don’t.
Credit unions are fundamentally different from for-profit credit card issuers. Federal credit unions have long been subject to a statutory interest rate cap, currently 18% under a temporary allowance that has lasted several years now. That ceiling has existed for decades and sits far below the rates cited in many political speeches.
As DCUC Chief Advocacy Officer Jason Stverak put it, credit unions already operate under a significantly lower cap because they’re built to put people over profits, not maximize shareholder returns.
According to the NCUA’s Q2 data, classic credit union credit cards average 12.76% APR compared to banks’ 15.38% average APR.
When Affordable Turns Into Unavailable
The real concern isn’t that a 10% cap would lower rates for borrowers with great credit. It’s that it would eliminate credit options entirely for many others – the very people credit unions were built to serve.
Risk doesn’t disappear because Congress dislikes it. If lenders can’t price loans according to risk they will tighten underwriting, reduce credit limits, and stop offering products to average working Americans altogether.
“A rigid federal cap would likely reduce access to credit by limiting credit unions’ ability to serve higher-risk borrowers,” Stverak warned. That impact would fall hardest on young servicemembers, junior enlisted personnel, and working families who are still building credit.
Military families, in particular, would feel this immediately. Credit unions routinely provide small-dollar emergency loans, starter credit cards and credit-builder products to help servicemembers bridge gaps caused by deployments, or unexpected expenses.
“These are precisely the kinds of responsible lending options that could become unsustainable under an arbitrary 10% cap,” said DCUC President/CEO Anthony Hernandez, a retired U.S. Air Force colonel. For families already juggling the stresses of military life, fewer safe credit options isn’t protection—it’s exposure.
If credit unions can’t responsibly lend to higher-risk members, those borrowers don’t stop needing money. They turn to less regulated, higher-cost alternative, such as payday lenders, title loans, or worse, often at triple-digit APRs.
A Threat to the Credit Union Service Model
The ripple effects don’t stop with loan access. DCUC also warns that a sweeping rate cap threatens the broader service model credit unions provide to military communities.
Interest income funds more than lending. It supports financial counseling, fraud protection, budget coaching, free account services and hardship relief programs. Cut their revenue sharply, and those services go away, too. This is particularly important for service members’ readiness due to financial stress.
Unlike for-profit lenders, credit unions can’t simply raise fees or tap investors to make up the difference. Their not-for-profit structure means pressure on lending translates directly into pressure on member benefits, especially on or near military bases, where credit unions play a critical role in financial readiness.
DCUC is calling for smarter, targeted solutions that protect consumers without cutting off access to credit. Those solutions include expanding financial education, promoting responsible lending models like credit-builder loans and payday alternatives and focusing enforcement on truly predatory actors that charge sky-high rates or exploit regulatory loopholes.