1. United States
2. Ill.
3. Letter

President Donald Trump has recently called for a bill that would temporarily cap credit card interest rates for one year at a rate of 10%. This is intended to provide relief for people, given that credit card interest rates have become very high and credit card debt as a whole is the highest it has ever been on record. However, many people are concerned. Naturally, the banking industry is not happy about this. They claim that capping interest rates would result in a decrease in the availability of credit. This is because financial institutions use higher interest rates to compensate for people who are a higher credit risk. In other words, people deemed to be riskier borrowers are charged higher interest rates than those deemed to be less risky. There seems to be mixed evidence on whether or not interest rate caps reduce the availability of credit to people deemed to be riskier, such as those with less income. Some evidence shows that when interest rates were lower in the past, default rates were not significantly higher than they are now. However, I am concerned about the possibility that, regardless of the actual risk to the banks, they will reduce credit availability to people they deem to be riskier. That could be a problem. Therefore, I believe any type of cap on credit card interest rates needs to come with important safeguards. These safeguards should basically prevent banks from denying credit to people because of this new measure. My idea would be: 1. Credit card issuers would be banned from discriminating against subprime borrowers, unless those borrowers have a history of being unable to consistently pay their debt within the past three years. 2. This would apply if they have a minimum of three missed payments in any 12-month period during the last five years. Otherwise, credit card issuers shall be required to extend credit to subprime borrowers, but they can offset the risk by offering lower credit limits—though no lower than $100.