Sen. Bernie Sanders (I-VT) and Rep. Alexandria Ocasio-Cortez (D-NY) have a new target for their ongoing mission to craft legislation that would force credit card companies to cap interest rates at 15 percent after Amazon announced it is offering a “credit builder” card for people with no credit or bad credit.
Synchrony Financial and Amazon are partnering to offer the “Amazon Credit Builder” that “lets users build up credit through a secured card, alongside budgeting tools and tips. It allows people eventually to ‘graduate’ to another Amazon Store card once they’ve established credit,” CNBC reported.
“It’s putting credit in the hands of people in a responsible way,” Tom Quindlen, Synchrony executive vice president and CEO of the bank’s retail card operation, told CNBC.
But Sanders tweeted on Thursday that he and Ocasio-Casio would make Amazon’s new card — with a 28.24 interest rate — illegal.
“Can you believe it? Amazon is issuing credit cards with 28% interest rates to ‘help’ people with bad credit,” Sanders tweeted.
“This kind of greed makes the poor even poorer and @AOC and I intend to outlaw it. Corporations will have to survive on a 15% cap on interest rates,” Sanders tweeted and Ocasio-Cortez retweeted.
Can you believe it? Amazon is issuing credit cards with 28% interest rates to "help" people with bad credit. This kind of greed makes the poor even poorer and @AOC and I intend to outlaw it. Corporations will have to survive on a 15% cap on interest rates. https://t.co/O3v1XOoMk3
— Bernie Sanders (@SenSanders) June 12, 2019
Last month the pair did a Facebook live event to announce their credit card bills, which include cracking down on payday lenders and would provide some banking services at U.S. Postal Service offices.
“It’s not just an economic issue, it’s a moral issue — charging people outrageously high interest rates,” said Sanders, who is also trying for a second time to become president of the United States, in the video.
“The reason this is a moral issue is because we should not be using people’s misfortune and using people’s income status as a basis for extortion and as a basis for predatory lending,” Ocasio-Cortez said in the video.
There is no reason a person should pay more than 15% interest in the United States.
It’s common sense – in fact, we had these Usury laws until the 70s.
(Max interest rates are record-high for ppl with excellent credit, too.)
It’s a debt trap for working people + it has to end. https://t.co/tYf4J892KQ
— Alexandria Ocasio-Cortez (@AOC) May 9, 2019
But some think that while there is some risk if cardholders fall behind on payments, it could help others, including the “unbanked, who don’t have traditional bank checking and savings accounts, to create a credit record.
According to a 2018 FICO survey, more than 11% of the population has a credit score below 550. About 4% of the population has a “bad credit score,” which according to FICO Score is between 300 and 499. Meanwhile, according to a 2017 survey by the FDIC, 25% of U.S. households are either unbanked or underbanked.
Ted Rossman, CreditCards.com’s industry analyst, said in the CNBC report that the cards are a “solid option” for people who are new to credit or aiming to improve their credit. Rossman said:
This is a very unique card, between the secured nature, the 5 percent cashback offer and the two different flavors of 0 percent interest (either 12 months of equal payments or 6/12/24-month 0 percent periods for select purchases). If used properly, this card can help you improve your credit while saving on interest or pocketing an attractive cashback return on items you would (hopefully) buy anyway.
“There’s always going to be people that we can’t give credit to — this is a large population that we weren’t able to reach,” Quindlen said. “It’s a new segment of the market.”
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