For people strapped with credit card debt, a bipartisan push to cap interest rates at 10% may sound like a win, but as often happens with price controls, the reality is more damaging than the rhetoric.

Capping the rate that low will limit access to credit, penalize high-risk borrowers and drive consumers into more precarious lending environments, while threatening the progress financial institutions have made in expanding access to credit.

Sens. Bernie Sanders, I-VT, and Josh Hawley, R-MO, introduced the 10 Percent Credit Card Interest Rate Cap Act as an amendment to the Truth in Lending Act. Proponents contend the measure offers overdue relief to those strained by $1.17 trillion in credit card debt. While the bill would seem to offer a quick fix, it oversimplifies the problem by ignoring how critical interest rates are in ensuring access to credit, balancing risks and maintaining financial stability in the broader lending ecosystem.

The bill suggests that an all-in APR cap would provide relief for hard-working Americans, while in reality, it would do the opposite. Banks will offset the lost interest revenue by reducing access to credit, increasing fees (e.g., late payments), scaling back rewards and introducing steeper annual charges, which would then make borrowing more expensive.

The restriction on credit access will have a domino effect on the financial responsibilities of many Americans. Credit cards are unsecured loans and banks use interest to price risk, especially for subprime borrowers. As a result of this proposed legislation, lenders will enforce stricter underwriting guidelines to compensate, effectively excluding consumers with lower credit scores or limited credit histories.

Over time, this issue could put individuals in a desperate place, causing them to rely on less scrupulous alternatives. High-risk consumers will seek support from payday lenders, buy-now-pay-later services or unregulated online lenders, which, ironically, would further increase their financial vulnerability.

In addition to traditional financial institutions, collateral damage from the bill’s passage may significantly hit fintechs, an industry built in part to serve the less traditional borrower.

Across the board, banks and fintechs have developed tools to make credit more accessible by using data to evaluate risk, but a 10% rate cap ignores the calculus in these models. It puts a ceiling on flexibility and may force both traditional and digital lenders to deny high-risk borrowers.

Rather than looking at this from a “one-size-fits-most” perspective, lawmakers should advocate for transparency and responsible lending standards, especially as the banking industry develops new ways to underwrite and price risk fairly.

Well-meaning legislation shouldn’t leave behind the very people it intends to help. We should focus on strengthening consumer protections, financial literacy and regulatory clarity around fees and disclosures. Let’s allow market forces to do what an interest rate cap cannot: expand access while maintaining fairness with reasonable risk.