Banking and Finance Law Daily Wrap Up, CREDIT, DEBIT AND GIFT CARDS—AFC opposes Senate bill allowing states to cap consumer interest rates, (Feb 12, 2026)

By Kathleen Bianco, J.D.

Trade association asserts that proposal would reduce credit availability to most vulnerable consumers and complicate compliance for credit providers.

The American Fintech Council (AFC), a standards based trade association representing fintech companies and partner banks, submitted a letter to the Senate Committee on Banking, Housing, and Urban Affairs opposing proposed legislation that would allow states to cap interest rates on credit cards and consumer loans. While supporting the goal of improving the financial health of American families, the group contends that the proposal would undermine that goal by reducing access to affordable credit, disrupting consumer credit markets, and increasing compliance burdens.

Background. The legislation, introduced by Senate Democrats, would restore state authority to set interest rate caps on many consumer credit transaction (see Banking and Finance Law Daily , Feb. 2, 2026). The bill would amend the Truth in Lending Act to require lenders to comply with the interest rate limits of a consumer’s home state, regardless of where the lender is located. This legislation would not apply to residential mortgage transactions. Currently, lenders are only required to follow their “home states” interest rate laws, which lawmakers contend led to banks reorganizing and moving to states with weak consumer lending protections.

AFC opposition. At the forefront of AFC’s opposition is the creation of a residency-based, state-by-state interest rate regime on nationally offered credit products. The group asserts that this approach would disrupt the existing national framework, making it more difficult for regulated institutions and their fintech partners to offer consistent products across markets. According to Phil Goldfeder, CEO of AFC, “By undermining the established national framework, this legislation risks cutting off access to mainstream credit, raising costs for responsible providers, and pushing consumers toward less transparent and more expensive alternatives.” This reduced access to mainstream credit would be especially damaging to historically underserved communities and non-prime and thin-file consumers.

The AFC also contends that the residency-based, multi-jurisdictional Annual Percentage Rate (APR) cap system would be operationally unworkable, creating complex and burdensome compliance obligations that would poorly aligned with modern credit markets. AFC points out that residency is not always clear-cut, can change, and may differ across co-applicants or authorized users. This uncertainty could lead to higher costs and legal risk for regulated providers, which may in turn affect consumers and the availability of credit. “A state-by-state cap creates an operationally unworkable compliance standard for modern digital credit markets and damages the national consistency that enables responsible bank-fintech partnerships to expand credit access,” said Ian P. Moloney, Chief Policy Officer of the American Fintech Council. “The bill fundamentally contradicts well-established statutory precedence that has underpinned the U.S. financial services industry for centuries.”

Overall, AFC urges the Committee to reject the bill, arguing that it reduces the consistency provided under the current federal framework, which allows regulated institutions to offer standardized products nationwide under uniform rules. Further, the group asserts that the introduction of state specific requirements tied to consumer residence could increase market fragmentation, with potential implications for compliance, consumer access, and risk management.

Companies: American Fintech Council

LegislativeActivity: ConsumerCredit CreditDebitGiftCards InterestUsury TruthInLending