The Association of Military Banks of America (AMBA) supports strong, effective consumer protections for service members and their families. However, a proposed policy to impose a 10% cap on credit card interest rates would have unintended and harmful consequences for military consumers, particularly junior enlisted personnel and those with limited credit histories.
While the proposal is well-intentioned, history and market evidence show that artificially low interest rate caps restrict access to credit rather than make it safer. For many service members, the reality is that credit cards are an important financial tool used to manage emergency expenses, PCS-related costs, temporary cash flow gaps, and unexpected family needs. A rigid 10% cap would dramatically reduce lenders’ ability to offer unsecured credit, especially to higher-risk borrowers.
As a result, many service members, especially many of our junior troops, would likely face reduced credit availability, lower credit limits, or complete loss of access to mainstream credit cards. This could push them toward less regulated, higher-risk alternatives such as payday lenders, informal lending, or unregulated online products that lack the protections of the federal banking system. It could also significantly increase their vulnerability to scams and fraud.
Importantly, service members are already protected by the Military Lending Act (MLA), which caps interest rates at 36% on certain types of consumer credit and imposes strict disclosure and consumer protection requirements. Credit card issuers serving military communities have invested heavily in compliance systems, financial education, and tailored products designed to meet service members’ unique needs while honoring these protections.
A 10% interest rate cap would also undermine responsible risk-based pricing, a foundational principle of safe and sound lending. Without the ability to price for risk, lenders are forced to reduce offerings or exit certain markets entirely. This outcome does not eliminate financial need. Instead, it simply removes safer options.
AMBA believes that policies affecting military consumers should be data-driven, targeted, and informed by real-world outcomes. Rather than imposing blunt caps that limit access, lawmakers should focus on enhancing financial education, strengthening enforcement against bad actors, and preserving access to regulated credit products that help service members build credit and financial resilience.
Protecting service members means ensuring they have access to fair, transparent, and responsible financial tools, not fewer options when they need them most.