By Marcus Bass
North Carolina Black Alliance
Advance Carolina
For generations, the fight for civil rights in North Carolina has been inextricably linked to the fight for economic justice. At the North Carolina Black Alliance and Advance Carolina, we carry forward that legacy today. Our mission is to advocate for policies that expand opportunity and build economic power within Black communities. We know that the change we seek is impossible without access to the financial tools that allow families to buy homes, students to afford their education, farmers to maintain their equipment, and entrepreneurs to launch and grow their small businesses.
Historically, Black North Carolinians were systematically excluded from the mainstream financial system through redlining and discriminatory lending. Opportunity was a closed door for many. Over the past several decades, however, we have made meaningful progress in expanding credit access. While the system remains far from perfect, it’s important to recognize that modern credit markets have brought millions of “credit invisible” people—those with limited or thin credit histories—into the regulated financial fold.
When used responsibly, credit cards play an essential role in further expanding access to credit. In fact, 74% of adults in the United States have a credit card in their name. When it comes to small businesses, 89% of them rely on credit cards to make purchases. For many Black-owned small businesses that lack deep cash reserves or long-standing banking relationships, a credit card is often the first and most accessible form of capital. It is the “financial oxygen” used to cover inventory, manage payroll, or handle an unexpected equipment repair in a pinch.
That is why we must look closely at proposals that risk deterring access to credit cards, such as a federal 10% cap on credit card interest rates. While the intention of lowering costs for families who are struggling with the high cost of living is one we all share, a blunt “one-size-fits-all” cap could produce unintended consequences.
Because credit card interest rates reflect the actual cost and risk of lending, if the government sets a rate below the cost of that risk, lenders do not simply absorb the loss. They tighten their standards and stop lending to anyone considered a “higher risk.” In our communities, where families and businesses are still working to build up their credit scores responsibly after decades of exclusion, the added impact of being labeled “Risky Borrowers” would be devastating to their family financial plan.
In a letter recently sent to lawmakers, the National Bankers Association, which has spent nearly one hundred years advocating for mission-driven banks that serve underserved and low-to-moderate income communities, stated that a ten percent rate cap would “stifle our shared financial inclusion goals, reduce access to credit, and push consumers to far more costly and less regulated lenders.” They pointed to research showing that, “When consumers lose access to credit, they often reduce spending on essentials such as healthcare, education, and food, and are more likely to fall behind on bill, mortgage, and rent payments.”
We have worked too hard to open doors to credit access for millions to risk them closing again. If we want to ensure that economic opportunities are accessible and equitable for all, we should focus on bipartisan solutions that increase transparency, support financial literacy, and encourage community-based lending. I urge our elected leaders not only to protect the progress we’ve made, but to continue to move us forward until every North Carolinian has a fair shot to realize their full potential.
Marcus Bass is the executive director of the North Carolina Black Alliance and executive director of Advance Carolina.
