In the Upstate, our vision for a globally competitive regional economy won’t be met by settling for the status quo, but by demanding bold, practical policies that allow our businesses to succeed and our people to prosper. As the president and CEO of the Greenville Chamber, I have the privilege of representing thousands of employers who understand that the “way we’ve always done it” isn’t good enough for the future we are building together.
One of the most critical components of this future is a stable, transparent financial system that rewards hard work and expands opportunity. Over the past several decades, we have seen a remarkable shift in how credit is accessed. We have moved from a restrictive era to a modern, inclusive system where entrepreneurs — from a tech startup in Greenville’s NextGEN program to a small manufacturer in a rural corner of our state — can access the capital they need to grow. Among the tools that have made this transition possible are credit cards. Today, credit cards are a vital resource for our small businesses, providing the immediate liquidity needed to manage payroll and bridge cash-flow gaps during seasonal shifts.
In fact, a new federal proposal to put a cap of 10 percent on credit card interest rates would represent a setback. While some folks may see it win for consumers, as someone who values data-driven policy, I know that artificial “price controls” always come with a hidden cost.
Hard work doesn’t require any talent, but it does require a fair playing field. In a free market, interest rates are not arbitrary; they reflect the actual cost and risk of doing business. Because credit cards are “unsecured” — meaning there is no collateral like a house or a piece of farm equipment to back the loan — the rate must cover the risk of default and the high cost of fighting fraud. This is what allows lenders to say “yes” to individuals and businesses that are just starting out.
A recent study analyzed the impact of enacting a 10 percent interest rate cap would have on access to credit for all Americans. The data is eye-opening for me, and what it says should be a wake-up call for policymakers. The study found that a 10 percent cap would result in between 74 percent and 85 percent of open credit card accounts nationwide being closed or having their credit lines drastically reduced. Low-income households, young workers ages 25 and younger, and small businesses would be some of those impacted the most by the reduction or elimination of credit. For those consumers who did retain access to credit, their cards would become less useful. Reduced credit limits and tighter standards would make it harder to cover emergencies or manage cash flow.
In Greenville, what we want for our future is an economy that can compete on a global stage. To achieve this, we have to expand access to opportunity, not shrink it. If our rural neighbors or our local entrepreneurs lose access to regulated credit, they will be forced toward less-regulated, higher-cost alternatives that offer none of the protections of the modern banking system.
Let’s keep our focus where it should be: on policies that drive competition, promote greater opportunity and protect the rights of private businesses. I urge our lawmakers to reject harmful rate caps and instead protect the financial tools that keep the Upstate and all of South Carolina moving forward.
Carlos Phillips is the president and CEO of the Greenville Chamber.