A bill designed to address consumer costs will turn out to be a death sentence for credit card access. Written as an emergency action, its intent is to cap credit card interest rates at 15 percent, cap late fees at $10, and prevent merchants from surcharging customers.
This legislation echoes a similar idea Trump touted in January, which prompted renewed calls at the federal level. However, lawmakers need to understand that as consumers continue to face rising costs, enacting a credit card interest rate cap will not meaningfully lower financial costs.
Under such proposals, high-risk borrowers will have less access to credit. The Federal Reserve Bank of New York (FRBNY) found interest rate caps result in a definite credit decline for higher-risk borrowers, and will do nothing to improve delinquency rates which have been increasing since mid-2025.
Consumers use credit cards because they function as a convenient purchasing tool and provide easy access to credit. A Consumer Bankers Association (CBA) report estimates a 75 percent increase in credit card transactions from 2015 to 2022 and notes that the rise can be attributed to the increase in credit card rewards, accessibility of credit, and also inflation.
If credit card access is blocked through legislation, the demand doesn’t disappear. Unable to access credit through traditional methods, high-risk consumers will be forced into alternative forms of lending.
The market has already seen a shift to Buy Now, Pay Later (BNPL), often as an alternative to credit cards. The service has grown 20 percent over the last 5 years, according to a Federal Reserve Bank of Richmond economic brief. The rise of BNPL loans has created a new form of credit access responding to consumer demand and attracts lower-income borrowers, an effect of the free market. While this is a positive market development, it should not evolve into the only option for lower-income borrowers.
BNPL is a single loan per purchase allowing users to pay in installments, whereas credit cards are revolving credit allowing continual access. The structure of BNPL supports single transaction purchases, and consumers are still subject to late fees. Even something as simple as returning an item can result in delayed refunds due to its structure.
The data also signals something this legislation fails to address: the pressure of rising costs. BNPL has been known as a purchasing tool for wants rather than needs; however, it has even expanded to include utilities and rent, signaling a need to split payments for basic needs between paychecks. Twenty-five percent of consumers use it to purchase groceries. As for the $1.21 trillion in credit card debt, Yahoo reports that 73 percent is from essential purchases. The real affordability emergency is the high cost of living.
Consumers are financially squeezed, but credit card interest rates are not one of those main expenses. Capping credit card interest rates will not solve the expense issues consumers face. A February 2026 report delves into the expenses consumers grapple with including credit card interest.
Top spending categories discussed include shelter, food, and vehicles, items that are directly paid for by the consumer. As for credit card interest, the report estimates that of total household expenditures of $80,000, credit card interest would only amount to about $1,180, as of 2024 data.
Therefore, this Arizona bill would only address a trivial portion of all consumer spending hardly affecting consumer expenses outright.
The report further noted that some consumers may, in fact, rely on credit cards to handle unexpected expenses. This makes an interest rate cap a barrier to consumer resilience. In short, addressing credit card interest rates is not going to make a difference for those hoping to solve the expense crisis. Tackling the affordability crisis does not start with reducing consumer access to financial resources.
Leah Locke is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. Follow Leah on X @leahmlocke.