Under federal law, credit card interest rate caps may only be set by issuers' home states. Therefore, many banks establish their credit card divisions in Delaware or South Dakota, two states with no limit on potential finance charges.
In addition to the ban on new investments, the three banks may lose millions of dollars in existing deposits from state entities and related groups. State treasurer Tim Cahill suggested that his office could shift over $240 million to competing banks. Meanwhile, churches and labor groups told reporters that they would move their business to local credit unions and community banks, mirroring similar actions in Missouri.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.