Commissioner Jamie Caudle: Rural North Carolinians need consistent credit access

North Carolina’s rural communities are the bedrock of our state. The family farms, including my own, that make up these communities help provide the food that feeds America. But despite this work, rural North Carolina continues to struggle. 

Most of our state’s rural counties are experiencing stagnant economic growth or they are contracting. Anson County, where I also serve as a County Commissioner, is no different. Our state is losing farmland at a rate that’s only exceeded by Texas. As the cost of operating these farms continues to rise, more farmers are calling it quits. It's a blow to our local, state, and national economies.

Now, despite the need for state and federal help to protect these farms and what they provide our country, some lawmakers in Washington are looking in the opposite direction and proposing legislation that would cut off one of the key financial tools rural communities still have. Some members of the U.S. Senate, including Senator Bernie Sanders (I-VT), have announced multiple proposals to cap credit card interest rates. 

Rural Americans have faced different barriers to credit access, in part due to lower incomes and higher poverty rates that mean lower credit scores and bank closures that have left many residents in banking deserts without physical locations. 10 percent of our state’s census tracts are considered banking deserts. Several communities in Anson County are included in that count. 

A cap on credit card interest rates would only worsen these challenges. 

Credit cards are currently widely accessible since banks will offer them to borrowers across the risk spectrum. High-risk borrowers without a long credit history or with a lower income have the same opportunity to gain credit card access as does a low-risk borrower with a 720-plus credit score. Lenders will simply offer higher-risk borrowers a higher interest rate that protects them from potential losses while still providing consumers, small businesses, and farmers with an entry point to a credit card that they can use to build their credit.  

And for rural communities, that access matters more than most people realize. Credit cards are a lifeline for much of rural America and farmers in particular.

They use them for purchasing important supplies like seeds and equipment. For the fuel that powers that equipment. And to help keep operations running between planting and harvest. For many of these farmers, a cap on interest rates means losing access to credit cards, which is one of the financial tools that may be the difference between remaining in business or becoming the latest in a growing list of farm closures. 

Lenders are not going to extend credit lines to individuals at a loss. And research shows that implementing a 10 percent cap will result in upwards of 159 million cardholders having their access eliminated. 

That will primarily hit those with credit scores below 720, which includes many members of our community. That means those that rely on these cards for the day-to-day management of their farm will lose access to them, making it more difficult to stay in business, while simultaneously hurting the economy.

Our state’s rural communities are navigating a difficult environment. Instead of uplifting them, some in Washington are looking to bury them. 

North Carolina’s leaders in Congress need to make sure they’re on the right side of this. Opposing credit card interest rate caps will ensure those that need credit, including in rural America, can continue to access it.