Placing Consumers at the Front of the Relief Effort: Redirecting Credit Card Interest Charges

Abstract

Catastrophes including the COVID19 pandemic of 2019-2020 impose great financial stress on consumers. This op-ed proposes the distribution of economic relief directly to consumers by authorizing credit card issuers to bill Congress for portions of the interest that otherwise would be charged to cardholders. Significant benefits include expanding access to consumer credit when it otherwise would be expected to diminish, reduced consumer default rates and bank charge-offs, and greater stimulus to overall economic welfare.

Keywords: credit card, COVID, coronavirus, interest charges, banks, financial institutions

JEL Classification: K1, K2, K4, I3, O2, O4