WASHINGTON (TNND) — President Donald Trump is reviving a promise from the campaign trail to reduce the rate of credit card interest costs in a move that could save consumers tens of billions of dollars but also faces fierce resistance from the industry and the risk of tightening access to credit at a time where many Americans are struggling to deal with the growing cost of living.
Trump said in a social media post over the weekend he wanted to impose a one-year, 10% cap on credit card interest rates.
“Please be informed that we will no longer let the American Public be “ripped off” by Credit Card Companies that are charging Interest Rates of 20 to 30%, and even more, which festered unimpeded during the Sleepy Joe Biden Administration. AFFORDABILITY!” Trump wrote.
He said the policy would go into effect on Jan. 20, though it’s unclear what mechanism the administration could force lenders into compliance unless Congress quickly passes a bill changing law.
Credit card interest rates average around 23% and can go much higher for borrowers with lower credit scores, according to the Federal Reserve.
Around 195 million people had credit cards in 2024 who ran up $160 billion in interest charges, according to the Consumer Financial Protection Bureau. Credit card debt has continued to climb in recent years and reached another all-time high over $1 trillion in the third quarter of 2025 based on figures from the Federal Reserve Bank of New York.
Banks immediately met the proposal with resistance and said implementing such a cap would force them to minimize the availability of credit to adjust for new levels of risk. A group of major trade groups for the industry said in a joint statement that the policy would hurt the consumers it was aiming to protect.
“Evidence shows that a 10% interest rate cap would reduce credit availability and be devastating for millions of American families and small businesses who rely on and value their credit cards, the very consumers this proposal intends to help. If enacted, this cap would only drive consumers toward less regulated, more costly alternatives,” the organizations said.
An earlier study on the issue by the industry said up to 90% of cardholders would lose access to credit if rates were to be capped through account closures or reduced limits on credit lines. But an analysis by the Vanderbilt Policy Accelerator found that the credit card industry would still be profitable with a 10% cap, but rewards and other perks could be scaled back.
Rates on credit cards have climbed over the last two decades delinquencies and charge-offs have become more common and the debt is unsecured, meaning there’s no collateral to back it if a borrower defaults on it. With auto and home loans, lenders can seize the asset if payments aren’t made.
“A credit card company has to have these higher rates, particularly on these more marginal credit card holders because this is a completely unsecured asset, unlike a mortgage or a car loan, where you have at least some collateral behind it. We always assumed it’s 100% loss severity,” said Cliff Rossi, a professor of finance at the University of Maryland’s Robert H. Smith School of Business who also worked in high levels of risk management for several large banks.
The short-term gains on such a proposal would likely benefit borrowers in lower- and middle-income households that carry balances by making it easier to catch up on payments or reduce the costs of not paying off credit cards at the end of the month. But those people are also most likely to lose out on lines of credit through a rate cap, analysts say.
Rewards programs could also take a hit if lending becomes less profitable for card issuers as they seek to make up for lost revenue from lower interest payments. Lenders could also introduce new fees or increase existing ones.
“Whack-a-mole is going to show up. You hit this over here, it’s going to have to show up over here at higher rates or higher fees or less credit,” Rossi said. “These are the levers — you have credit, you have fees, you have rates, and you have rewards. If you start capping the rate, then the other three are going to have to be adjusted in a manner so that the bank can still make a risk-adjusted return for the shareholders.”
It comes as the number of Americans who are carrying long-term credit card debt is on the rise with more households reporting difficulties financing necessities like groceries and utility bills. A Bankrate survey released on Monday found 61% of people in credit card debt have been carrying it for at least one year, up from 53% in 2024. Nearly half of cardholders said they carry debt from month to month.
Putting a cap on credit card interest rates has been proposed in legislation by lawmakers on both sides of the aisle in Congress. Sens. Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., introduced a bill last year to cap fees at 10% for several years. In the House, Reps. Alexandria Ocasio-Cortez, D-N.Y., and Anna Paulina Luna, R-Fla., have proposed similar measures.
Whether the policy could garner enough support to become law wasn’t immediately clear despite interest from different factions among Democrats and Republicans.
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