Banks and credit card companies are pushing back after President Donald Trump renewed a campaign pledge to impose a one-year cap of 10% on credit card interest rates, a move that could significantly lower borrowing costs for consumers but disrupt a highly profitable industry.
Trump floated the proposal late Friday, saying he wants the cap in place by Jan. 20, one year after he returned to office. It remains unclear whether the administration would pursue the cap through executive action or legislation, though at least one Republican senator has indicated plans to work on a bill with the president’s backing.
Financial institutions and Wall Street groups, many of which supported Trump’s 2024 campaign and broader second-term agenda, quickly raised concerns. Banks argue that sharply limiting interest rates would lead lenders to restrict access to credit, particularly for higher-risk borrowers, potentially pushing low-income consumers toward costlier and less regulated alternatives such as payday loans or pawnshops.
Researchers who previously analyzed the proposal estimate that a 10% cap could save Americans roughly $100 billion a year in interest payments. The same analyses suggest the credit card industry would remain profitable, though rewards programs and cardholder perks could be scaled back.
According to the Consumer Financial Protection Bureau, about 195 million Americans held credit cards in 2024 and paid an estimated $160 billion in interest. Total credit card debt now stands at about $1.23 trillion, based on data from the Federal Reserve Bank of New York. Average credit card interest rates currently range from about 19.6% to more than 21%, near the highest levels recorded since the mid-1990s, despite recent cuts to benchmark rates by the Federal Reserve.
The proposal marks a notable shift for an administration that has generally been favorable to the financial sector. Earlier this term, the White House raised little objection to Capital One’s acquisition of Discover Financial, creating the nation’s largest credit card issuer. Meanwhile, the CFPB’s enforcement role has been significantly curtailed.
Banking industry groups warn that interest rate caps could reduce lending to borrowers with lower credit scores, citing historical examples where strict caps limited access to consumer credit. Research on Trump’s proposal suggests that borrowers with credit scores below 600 would be most affected by reduced credit availability.
Despite industry opposition, the idea has drawn bipartisan interest on Capitol Hill. Lawmakers in both parties have introduced legislation that would impose similar limits on credit card interest rates, reflecting growing concern over household debt and high borrowing costs.
Source: PBS