When a Simple Idea Isn’t All That Simple

There’s been a lot of talk over the last couple weeks about the President’s idea to cap credit card rates at 10% for a year. It certainly grabbed headlines, and I understand why — affordability is on everyone’s mind right now. On the surface, it sounds simple. But as soon as you start to dig into some of the real‑world consequences of a cap like this, the story gets a lot more complicated.

That’s why we sent a survey to credit unions across Michigan. We wanted to hear in your own words how a change like this would affect you and your members. Reading through your responses, what really stood out was how well you know your members and what they’re navigating — and I wanted to write about them here because your insights give this conversation the context it deserves.

A lot of you naturally brought up your second‑chance borrowers: families working hard to get back on their feet, folks rebuilding after a setback or the young members with no credit score yet. One credit union said they’ll work with members who have no score, and another offers the same rate on secured and unsecured cards so folks who are rebuilding aren’t punished for it. We also heard stories about how you turn to relationship‑based lending when you know a credit score isn’t the whole story. Credit unions know that financial progress isn’t always linear, and you embrace that reality. It’s a big part of what makes our movement unique.

All of that came through clearly in what you shared. It also put into focus what a cap would mean for the members actually using these cards. Based on the credit unions that responded, the average rate landed at about 11.85%. Those slightly higher rates are what allow credit unions to keep saying yes, especially to members who are rebuilding and naturally bring higher losses. And with nearly 70% of credit unions in the survey saying they offer a credit‑building card, it’s easy to see how a hard cap would make that work harder to do.

We also saw that a lot of the members using these cards have scores below 700. The problem is, the proposed rate cap doesn’t come with anything that suddenly makes these members less risky to serve, it just takes away the flexibility we’d have to serve them. Understandably, many of you said that if this 10% cap went into effect, you simply wouldn’t be able to continue offering cards to many of your members. As is too often the case, the ones most affected are the ones who already need our help the most.

When we asked about fraud and losses, many of you said those costs are climbing. A number of you shared that fraud now runs well into the six figures each year, on top of operating costs you’re already working hard to manage. We also heard about the cost of maintaining rewards programs that members really value. For most of you, credit cards are only about 3% of assets, which tells me these programs are about access, not driving up revenue. Add a hard cap on top of operating costs, fraud and the risk of serving members at different financial stages, and the numbers just don’t add up.

We’ve seen how this plays out. When traditional access is limited or taken away, people don’t stop needing credit — they just end up with worse options. Payday lending is a good example of that. Michigan credit unions have spent years helping members avoid those traps, and the survey responses we got reflected that experience. You know one‑size‑fits‑all policies don’t work, because you’re the ones hearing your members’ stories and shaping products around their needs.

We’ll be using what you shared in the survey to shape our advocacy work going forward. The responses give us concrete examples to bring to lawmakers so they understand how this would play out for consumers. As we’ve seen before, the best way to shape policy is simply to make sure leaders understand the real‑life impact behind the headlines. Thank you, as always, for helping us understand what’s really happening in your credit unions and in your members’ lives.

Right now, America’s Credit Unions has a targeted call to action open for credit union leaders and advocates. You can find the rate cap action alert in their Grassroots Action Center, and the MAP Resource Center has talking points you can use with your staff and boards.

Thanks for reading.

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