Assembly Votes to Retain 19.2% Rate on Credit Cards

SACRAMENTO — The state Assembly voted Thursday to continue California’s 19.2% ceiling on credit card interest rates, instead of letting the ceiling drop to 18% next year. The vote was 53 to 12.

In a related action, the Assembly defeated a bill that would have prohibited businesses from requiring customers to give their home telephone numbers or show other identification in order to use credit cards. The bill died on a 20-46 roll call.

The Legislature raised the maximum allowable interest rate on credit cards from 18% to 19.2% in 1980 when interest rates nationally were at record highs for modern times, but that law will expire next Jan. 1.

Assemblyman Charles Calderon’s bill, sent to the Senate on Thursday, would extend the 19.2% rate ceiling indefinitely.

In a brief floor debate, Assemblyman Rusty Areias (D-Los Banos) labeled Calderon’s bill “a $50-million giveaway” to the banks and other lenders.

Areias said the higher rate was justified in 1980 because of the high costs financial institutions had to pay for the money they loaned out on credit cards, “but the prime rate today is a third of what it was in 1980, and there is no justification” for a continued 19.2% ceiling.