Senators Bernie Sanders and Josh Hawley teamed up earlier this month to introduce a bill that would cap credit card interest rates at 10 percent for five years. In a new insight, Director of Competition Policy Fred Ashton walks through the many economic consequences this policy would produce.

He concludes:

A government-dictated price for credit card borrowing, specifically one below any historical market-determined price, would significantly reduce the supply of credit and likely debank millions of customers. The credit crunch would push consumers – often the most financially vulnerable – to other, and often far costlier, credit providers outside the traditional banking system. In turn, banks would likely reduce rewards programs and other card benefits, including fraud protection, while replacing lost interest revenue with more fees to be paid by all credit card users.

Read the analysis