Solveig Singleton
The Century Foundation has proffered a report to advocate for credit card interest rate caps, on grounds that many Americans carry credit card debt: the headline dramatically declares that this is a crisis.
There is no crisis. Even the Consumer Financial Protection Bureau’s 2025 Consumer Credit Card Market Report notes that credit card balances have been mostly flat for the past ten years, when adjusted for inflation. Indeed, according to Fed data, average total credit card debt for all households declined from $8,000 to $6,000 between 2005 and the beginning of 2025. (To replicate using the Philadelphia Fed’s web tool, choose variables “Average Debt ($) Inflation Adjusted,” and “All.”) The percentage of borrowers with credit card debt has increased only slightly over the same period, from just under 80 percent to just over 80 percent (choose variables “With Debt” and “All”).
When retail prices rise, credit card balances might rise too—because credit cards help consumers spread the cost of education, medical care, car repairs, new mattresses, or travel out over time. Since 2023, unemployment has risen somewhat, and expected inflation rates are high; delinquent debt is correspondingly trending upwards. (Choose “With Severely Delinquent Debt.”) But it makes sense that some families have a hard time paying their card balances, given the increases in the prices for pretty much everything.
Would credit card rate caps help these consumers? No. Rate caps would mean that struggling consumers have a hard time getting credit.
Price controls often mean shortages of food, fuel, or financial services. They also tend to come with increases in other fees, another blow to struggling consumers. These effects of price controls—and interest rate caps and credit card price term regulation in particular—are widely known and thus avoidable.
We do not live in a simple world where the intent behind a law magically prevents unintended consequences. Luckily, we do live in a world where we know the downside of interest rate caps.