What does Interest rate cap mean?
In credit cards related terminology the interest rate cap is the exact opposite of “floor”. The floor is the minimum “threshold” interest an lender will charge you for the whole of the term, while the interest rate cap is the top threshold, the maximum limit which they may charge you. The interest rate cap, which is very high, and sometimes may hit even 25%-30%, is a sort of cover for the banking institution many times in case you default on your payments for example. Due to the very high percentage of interest rate cap most of the banking institutions have, some political spokesmen and senators have proposed that the legislation should change and enforce a maximum interest rate cap chargeable of 15% by most of the banking institutions.