Interest Rate Caps Shift Credit Access, the Fed Finds

Summary

The New York Fed’s study of state‑level credit‑card interest caps (up to 36%) shows that such limits don’t shrink overall credit but shift it away from subprime borrowers, cutting their account numbers by 20% and balances by 16.9% without lowering delinquency rates. Industry expert Brian Riley explains that lower APRs won’t ease household budgets because high‑risk borrowers face broader financial pressures, and caps hinder lenders’ ability to price risk accurately, potentially harming low‑risk consumers as well. The findings suggest that a nationwide 10% cap would likely reduce credit access for lower‑income borrowers while offering little risk mitigation.