WASHINGTON—As Congress debates renewed proposals to cap credit card interest rates, Defense Credit Union Council President and CEO Anthony Hernandez is urging lawmakers to reject not only a potential 10% rate cap, but also a growing push to apply an “all-in” APR methodology that he argues could unintentionally restrict access to responsible credit.
Hernandez’s comments follow Rep. Maxine Waters’ (D-CA) attempt Thursday to attach a 10% credit card interest rate cap to legislation during a House Financial Services Committee markup. The amendment was ruled non-germane after Rep. Andy Barr (R-KY) raised a point of order, a move Chairman French Hill upheld, blocking the proposal. While procedurally unsuccessful, the episode reinforced that rate-cap legislation remains a live policy threat, particularly for credit unions and community lenders.
All-in pricing for credit cards means calculating the card’s interest rate by including not just the stated interest rate, but also most fees and charges—such as annual fees, late fees, balance-transfer fees, and certain add-on costs—when determining the true cost of borrowing. Instead of measuring only the interest charged on a balance, an all-in APR bundles interest plus fees into a single effective rate, which can make borrowing appear more expensive—especially for smaller balances or short-term debt, where fixed fees have a larger impact on the percentage rate.
Hernandez said the debate should not focus solely on headline interest rates, but also on how APR is calculated, warning that an “all-in” APR model—such as the one used under the Military Lending Act (MLA)—can distort loan pricing and harm borrowers. He argued that Congress should instead rely on the Regulation Z definition of “finance charge” under Section 1026.4(a), which aligns with the NCUA’s long-standing approach to enforcing federal credit union interest-rate caps.
Hernandez pointed to prior industry warnings during a July 2021 Senate Banking Committee hearing on extending the MLA’s 36% all-in cap to the broader public. At that time, CUNA and NAFCU cautioned that an all-in methodology would force lenders to offer larger and longer-term loans—because those loans mathematically fit under the cap more easily—potentially pushing borrowers into taking on more debt than needed or excluding higher-risk consumers from regulated credit altogether. Industry groups warned the unintended consequence could be driving vulnerable borrowers toward predatory lenders instead of protecting them.
Hernandez said the same risk now applies to credit cards and small-dollar lending, arguing that blunt all-in pricing frameworks could reduce product flexibility, eliminate responsible short-term credit options, and weaken financial readiness for military families and lower-income borrowers. Rather than expanding MLA-style pricing rules, he urged policymakers to modernize the law while preserving Reg Z-based pricing standards, ideally in coordination with the FDIC, NCUA, CFPB, and other federal regulators.
The comments come as credit unions and all financial institutions continue lobbying against a national credit card rate cap.
Confusing For Cardholders
“It seems the proposal intends to include all fees in the APR calculation,” said credit card portfolio expert Tim Kolk, principal of TRK Advisors. “If that is what is really being proposed it creates two main issues. First, like the straight 10% cap, any such constraint will limit credit availability and reshape the credit card industry. The potential impacts of that have been widely reported already.
Kolk stressed that it remains unclear how such APRs will be calculated and reported on individual accounts each month.
“While the total costs expressed in dollars-and-cents is easy enough to disclose, reporting an APR is dependent on the balance amount which is ever-changing and different for all accounts,” he said. “Operationally it would require significant work to implement, and is likely to be confusing for cardholders. For example, an account that has a modest $250 balance but pays a $30 late fee will, interest aside, show an APR over 100%. And if that is subject to a cap basically no late fees will be applied. This proposal certainly demonstrates that the regulatory conversations are ongoing.”