Sen. Chris Dodd (D-Conn.) released the text of his credit card reform package on Monday and we posted it online, asking for your thoughts. More than 90 percent of readers who wrote in wanted to know why there was no cap on interest rates as part of the bill. So we asked Dodd about the omission.
"I suspect before this week is out we'll get a couple proposals in that area," he said. What amendments will be offered is still being debated and will ultimately be decided by Senate Majority Leader Harry Reid (D-Nev.).
"I can't speak for my colleagues, but I can tell you there's a growing appetite for that, when you look at some of these rates, in fact, rates as high as 32 percent," said Dodd, chairman of the banking committee.
"There used to be a time you could go to jail for charging rates like they charge today. Even organized crime would blanche at some of these fees. So there'll be a movement in that regard. There's obviously some legitimate arguments about opposing caps and I'm listening to them, but frankly the overwhelming majority of people I talk to would like to some limitation put on these rates."
Sen. Bernie Sanders, an independent from Vermont, and Sen. Dick Durbin (D-Ill.) have both introduced rate caps -- with Durbin at 36 percent Sanders at a much lower 15 percent.
Dodd said he's still weighing the issue, but could be convinced.
"I'm still inclined to want to do something in that regard, but is there a magic number or not? I'm kind of up in the air on that. I want to be realistic about it," he said. "I know that Bernie has talked about rates that credit unions use -- 15 percent plus three percent -- but what people don't tell you is that they also have a lot of fees at credit unions that make that 15 or 18 percent a little bit illusionary."
The problem with a cap on annual interest rates (APR), said Dodd, is that folks who lend for just a few days might be driven out of business. But ignoring those lenders, he said, misses some of the most "vicious" interest rates.
"We may need to be more creative in how we think about putting limitations on that kind of a [payday] loan as opposed to a loan that is more based on APR rates," he said.
How about a cap just on credit card interest rates?
"There could be. That could happen," he said.
How will Trump’s administration impact you? Learn more