Originally published at X.com. It has been republished here with permission of the Author.
Imagine you’re at the grocery store, using your rewards credit card to earn points for a future flight or cash back. But behind the scenes, lawmakers are pushing policies that could render that card obsolete, along with your access to credit.
Credit is not a luxury. It’s often a lifeline. Whether covering a surprise car repair, bridging the gap between paychecks, or financing groceries during tough times, credit cards play a crucial role in financial resilience for millions of Americans. Yet lawmakers in states like Texas, Louisiana, Alaska, and Florida are considering—or have considered—proposals that would gut this system from within, all under the banner of “consumer protection.”
Bills targeting interchange fees—such as Texas HB 4124 , Louisiana HB 417, Alaska HB 171, and Florida SB 564—seek to prohibit banks and credit unions from collecting interchange fees on the tax and tip portions of credit and debit card transactions. Though Florida’s bill ultimately died in the Senate calendar in 2023, its mere introduction reflects a troubling willingness among some lawmakers to undermine competitive markets with government price controls.
At the same time, federal efforts like the Credit Card Competition Actand proposals to cap credit card interest rates—most notably by Senator Bernie Sanders (I-Vt.) and Senator Elizabeth Warren (D-Mass.)—seek to limit what banks and credit unions can charge for lending. The economic term for this is price control. And history is clear: price controls don’t work. They distort markets, shrink supply, and hurt the very people they claim to help.
Interchange fees are a core component of the payment ecosystem. These small charges fund fraud prevention, support the infrastructure of global payment networks, and help make rewards programs possible. More importantly, they balance a two-sided market: merchants gain customers, and consumers gain access to credit, security, and convenience.
When states legislate the portion of a transaction that is exempt from fees, they are effectively capping the price banks can charge for providing these services. That’s not just economic micromanagement—it’s market sabotage. Smaller banks and credit unions, in particular, are unable to absorb these losses. With thinner margins and higher compliance costs, they’ll be forced to scale back rewards or tighten lending standards. For consumers, that means fewer credit options and reduced access, especially for those who need it most.
On the federal stage, proposals to cap credit card interest rates at 10% may seem like a favor to consumers, but in practice, they would eliminate credit options for millions. Risk-adjusted pricing is a method that helps lenders to serve a diverse range of borrowers. Remove the ability to price for risk, and lenders retreat to serving only the safest customers. The unbanked and underbanked—already 22% of Americans—will be pushed further to the margins.
These rate caps are a rerun of Regulation Q, which once capped interest on bank deposits. It was phased out in the 1980s for good reason: it distorted savings markets, reduced access for small savers, and discouraged capital formation. Applying similar caps to credit markets will yield similar results—less availability, less flexibility, and more people turning to costly payday loans or unregulated lenders.
Credit access enables individuals to navigate emergencies, invest in themselves, and mitigate financial volatility. It’s the freedom to act in the moment, to make choices based on needs rather than constraints. Limiting access through regulatory price caps doesn’t make credit more affordable—it makes it vanish.
And that’s the heart of the issue. These bills and proposals claim to protect consumers, but in reality, they serve to protect political optics while harming working families. A parent trying to buy back-to-school supplies or pay an unexpected medical bill doesn’t benefit from these rules. They suffer when their card is declined or their account is closed.
If lawmakers want to help consumers, they should start by encouraging competition and reducing federal regulatory barriers that prevent smaller banks and fintech companies from entering and innovating. Let institutions compete on pricing, service, and value, rather than limiting them by legislative fiat.
Consumers don’t need protection from their own financial choices. They need access, transparency, and the freedom to choose the tools that best suit their needs.
Milton Friedman once said that “one of the great mistakes is to judge policies and programs by their intentions rather than their results.” The intention to “protect consumers” is noble, but the result of these policies is clear: reduced access, fewer options, and a step backward in financial inclusion.
Legislators must reject the temptation to impose price controls on financial services. Instead, they should protect consumer choice and promote access to credit. The future of financial empowerment depends on freedom, not fiat.
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