Donald Trump has reignited a significant campaign promise by proposing a one-year cap on credit card interest rates, suggesting that this limit would be set at 10 percent. He believes this measure could potentially save American consumers an astonishing $100 billion annually. However, this proposal has already faced pushback from the banking and financial sectors.
It's yet to be determined whether Trump intends to bring this cap into effect through executive order or legislative action. Nonetheless, a Republican senator has confirmed ongoing discussions with Trump about this initiative and has pledged to support a related bill. Initially, Trump had aimed to have this cap in place by January 20, exactly one year after his inauguration.
Anticipation of strong resistance is evident, particularly from Wall Street and credit card companies, many of which have financially backed Trump’s 2024 campaign and his aspirations for a second term. On his social media platform, Truth Social, Trump expressed his determination: "We will no longer let the American Public be ripped off by Credit Card Companies that are charging Interest Rates of 20 to 30%."
Research conducted following Trump's announcement revealed that capping credit card interest rates at 10 percent could result in substantial savings for Americans, totaling around $100 billion in interest payments each year. Although credit card companies would likely experience a significant decline in profits, they would still remain profitable overall, albeit with the possibility that benefits like rewards and other perks might be diminished.
As of 2024, approximately 195 million people in the United States held credit cards, accumulating around $160 billion in interest charges, according to data from the Consumer Financial Protection Bureau. The New York Federal Reserve reported that Americans are currently grappling with an unprecedented level of credit card debt, reaching approximately $1.23 trillion as of the third quarter of the previous year.
Currently, the average interest rate charged on credit cards ranges between 19.65 percent and 21.5 percent, according to the Federal Reserve and various industry analysts. While there has been a slight decrease due to recent cuts in benchmark rates by the central bank, the current rates are still among the highest recorded since the mid-1990s. This marks a significant increase compared to rates from a decade ago, when the typical credit card interest hovered around 12 percent.
The Republican administration has historically shown a favorable stance towards the credit card industry. For instance, Capital One faced minimal opposition from the White House when it completed its acquisition of Discover Financial in early 2025, a merger that resulted in the formation of the largest credit card company in the nation. Since Trump took office, the Consumer Financial Protection Bureau, which is primarily responsible for regulating credit card companies and addressing complaints of misconduct, has largely been inactive.
In response to Trump’s proposal, the banking sector issued a joint statement expressing their dissent, warning, "If enacted, this cap would only drive consumers toward less regulated, more costly alternatives," as declared by the American Bankers Association and associated groups.
Bank lobbyists have long contended that lowering interest rates on credit card products would necessitate a reduction in lending to higher-risk borrowers. They cite previous instances where Congress capped fees imposed on merchants for debit card transactions, resulting in banks eliminating rewards and benefits associated with those cards. Only recently have some debit card rewards begun to return, exemplified by United Airlines’ new debit card offering miles for purchases.
Interestingly, the U.S. does impose interest rate caps on certain financial products targeted at specific demographics. For example, the Military Lending Act prohibits charging active-duty service members more than 36 percent for any financial product. Additionally, the national regulator overseeing credit unions has established an interest rate cap of 18 percent on credit union credit cards.
Credit card companies typically generate revenue from three main sources: fees charged to merchants, fees levied on customers, and interest collected on outstanding balances. Some researchers and progressive policymakers argue that banks can maintain profitability through merchant fees alone, even if interest rates are capped.
"By instituting a 10% cap on credit card interest, we could save Americans $100 billion annually without leading to widespread account closures, contrary to what banks assert. This is feasible because the major banks dominating the credit card market are reaping enormous profits from consumers across all income brackets," explained Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, who conducted research on the implications of Trump’s proposal last year.
When questioned, the White House did not provide details on how the president plans to implement this interest rate cap or whether he has engaged in discussions with credit card companies regarding this idea.
Senator Roger Marshall from Kansas, who spoke with Trump recently, indicated that this initiative aims to reduce financial burdens on American families and rein in "greedy credit card companies that have exploited hardworking Americans for far too long."
In both the House and Senate, legislation is being considered that aligns with Trump’s proposed measures. Senators Bernie Sanders, an Independent from Vermont, and Josh Hawley, a Republican from Missouri, unveiled a plan earlier this year to immediately enforce a 10 percent interest rate cap for five years, hoping to leverage Trump’s campaign promise to gain traction for their proposal.
Interestingly, just hours before Trump’s announcement, Sanders criticized the president for focusing on deregulating large banks, thereby allowing them to impose much steeper credit card fees rather than working to cap interest rates. Furthermore, Representatives Alexandria Ocasio-Cortez, a Democrat from New York, and Anna Paulina Luna, a Republican from Florida, have introduced similar legislative efforts. Notably, Ocasio-Cortez often finds herself as a target of Trump’s political rhetoric, while Luna is considered a close ally of the former president.
