How Ads Increase Your Credit Card Bills

Americans have $1.2 trillion in credit card debt, and a bipartisan group of lawmakers wants to take on the credit card cabal and stop the bleeding. Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Bernie Sanders (I-Vt.) have joined Republicans Rep. Anna Paulina Luna (R-Fla.) and Sen. Josh Hawley (R-Mo.) in new pushes to cap credit card interest rates at 10 percent — a proposal backed by Trump on the campaign trail. 

A new Federal Reserve report proves credit cards’ exorbitantly high interest rates, which have nearly doubled in the last decade, do not reflect true business costs but instead monopoly power. Credit card lending averages a 6.8 percent return on assets for banks, more than quadruple that of the rest of the banking sector. Credit card companies typically insist high interest rates account for lenders’ risk, but the Fed found that they likely earn an excess risk premium by sticking low-credit-score customers with high interest rates.