President Donald Trump has brought back a campaign promise to limit credit card interest rates.
He is now proposing a one-year cap, meaning credit card companies would not be allowed to charge more than 10% interest during that time. Supporters say this could save Americans tens of billions of dollars, but banks and Wall Street are not happy with the idea.
Trump posted on social media that he is frustrated with credit card companies charging high interest rates — often between 20% to 30%. He didn’t say if he will try to make this change through an executive order or if he will ask Congress to pass a law.
However, a Republican senator said he talked to Trump and would support a bill starting January 20, exactly one year after Trump’s term would have begun.
How Would a Cap Help Americans?
Research suggests that a 10% interest cap could save Americans about $100 billion each year. Even with this lower rate, banks could still make a profit, but they might reduce popular credit card rewards or other perks.
In 2024, around 195 million Americans had credit cards and paid $160 billion in interest overall, while credit card debt added up to $1.23 trillion. The average interest on credit cards is currently between 19.65% and 21.5%.
How Are Banks Responding?
Banks and the financial industry do not support this idea. The American Bankers Association said that if this cap becomes law, it may force people with low credit scores to use other, more expensive forms of credit.
They also argue that when interest rates are capped, as happened with debit card fees in the past, banks often get rid of rewards and perks for everyone. They worry that people with credit scores below 600 could find it much harder to get a credit card.
Where Do Interest Rate Caps Already Exist?
Some interest rate caps already exist in the U.S. For example:
- The Military Lending Act limits interest rates to 36% for service members.
- Credit unions can’t charge more than 18% interest on credit cards.
Historically, these caps help consumers, but can also mean fewer loans are available for people who are seen as risky borrowers.
What Are Lawmakers Doing?
Some lawmakers from both parties are interested in capping interest rates. Senators Bernie Sanders and Josh Hawley have proposed a five-year 10% cap, citing Trump’s idea.
Representatives Alexandria Ocasio-Cortez and Anna Paulina Luna have suggested similar measures.
Senator Roger Marshall, who supports the effort, said the main goal is to lower costs for American families and stop credit card companies from taking advantage of hardworking people.
Concerns and Uncertainty
Critics warn that unless a cap is carefully managed, it could mean fewer people (especially those with lower incomes) would qualify for credit cards and might be pushed toward payday loans, which are often much more expensive.
Banks say rewards programs would also be reduced for all credit card users.
It’s not clear if Trump will be able to enforce a one-year cap, especially with strong opposition from banks. However, his proposal has sparked new discussion over whether credit card rates are fair, how much profit banks should make, and the impact of high interest rates on American families.
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