A proposed federal ceiling of 10% on credit card interest rates could sharply limit access to revolving credit for US consumers, according to new figures from the American Bankers Association (ABA).

The trade body said data supplied by card issuers covering around 75% of the market indicates that between 137 million and 159 million existing cardholders would no longer be able to use their cards if the cap took effect.

The findings are based on an assessment of the “10 Percent Credit Card Interest Rate Cap Act”, sponsored by Senators Josh Hawley and Bernie Sanders.

The ABA said the data shows that between 74% and 85% of active US credit card accounts would either be closed or face substantial cuts to their credit limits under a 10% annual percentage rate cap.

It added that state-level patterns align with the national picture, suggesting similar disruption across the country.

According to the association, the measure, while intended to curb borrowing costs, would instead “effectively eliminate” credit cards as a day-to-day payment option and key liquidity source for tens of millions of Americans.

ABA president and CEO Rob Nichols said: “This new data is clear: interest rate caps lead to fewer options, higher costs and reduced access – especially for those who can least afford to lose their credit card.

“We urge the administration and Congress to carefully consider the significant harm a rate cap would have on US households and the broader economy. This is not the solution to the affordability challenge.”

The ABA said the impact would extend well beyond higher-risk borrowers. It expects most cardholders, including those who regularly clear their balances, to face stricter underwriting, lower limits, higher fees, reduced rewards and benefits, and fewer low-rate promotional offers.

The data indicates that among cardholders with VantageScores above 600, between 71% and 84% would see their accounts shut or their credit lines sharply reduced.

The association added that many “super-prime” customers with VantageScores above 780 would also be negatively affected.

The group argued that a 10% cap would ultimately damage affordability for most households.

It warned of potential loss of access to highly regulated card credit in emergencies, pushing some borrowers towards less-regulated and often more costly alternatives.

The ABA also flagged the risk of reduced consumer spending power and said small businesses and the wider US economy could be hit, noting their dependence on nearly $3.6tn in annual purchases made using consumer credit cards.