Trump Pushes 10% Credit Card Interest Cap, Setting Up Clash With Banks and Wall Street

BY EMMANUEL OGBONNA

Reviving a campaign pledge that had faded after the election, President Donald Trump has proposed a one-year cap of 10% on credit card interest rates, a move that could dramatically reduce borrowing costs for millions of Americans while setting up a direct confrontation with the financial industry that has largely supported his agenda.

In a social media post late Friday, Trump said he wanted to curb what he described as excessive interest rates charged by credit card companies, which often range from 20% to 30%. He did not specify whether the cap would be imposed through executive action or legislation, leaving key questions unanswered about how the policy would be implemented. One Republican senator, however, said he had spoken directly with the president and would begin work on legislation with Trump’s full backing.

Trump said he hoped the cap would take effect on Jan. 20, marking one year since he returned to office.

“We will no longer let the American public be ripped off by credit card companies that are charging interest rates of 20 to 30%,” Trump wrote on his Truth Social platform.

The proposal immediately drew resistance from the banking and credit card industry, which has been a reliable political ally of the president and contributed heavily to his 2024 campaign and second-term priorities. Industry groups warned that an interest rate cap could reduce access to credit, particularly for higher-risk borrowers, and push consumers toward less regulated alternatives.

“If enacted, this cap would only drive consumers toward less regulated, more costly alternatives,” said a joint statement from the American Bankers Association and allied industry groups.

Still, consumer advocates and some researchers argue that the policy would deliver substantial relief without crippling the industry. Studies examining Trump’s campaign pledge estimate that Americans could save roughly $100 billion a year in interest payments if credit card rates were capped at 10%. While such a cap would reduce industry profits, the research suggests major card issuers would remain profitable, though rewards programs and other perks could be scaled back.

The debate comes as Americans carry record levels of credit card debt. About 195 million people in the United States had credit cards in 2024 and paid an estimated $160 billion in interest charges, according to the Consumer Financial Protection Bureau. Total credit card debt stood at roughly $1.23 trillion in the third quarter of last year, based on data from the New York Federal Reserve.

Average interest rates on credit cards remain elevated despite recent cuts to benchmark rates by the Federal Reserve. Consumers are currently paying, on average, between 19.65% and 21.5% in interest, according to the Federal Reserve and industry tracking sources. While that represents a slight decline over the past year, rates are near the highest levels recorded since regulators began tracking them in the mid-1990s. A decade ago, average credit card interest rates were closer to 12%.

Until now, the Trump administration has generally taken a hands-off approach toward the credit card industry. Capital One faced little resistance from the White House when it finalized its purchase of Discover Financial in early 2025, a merger that created the nation’s largest credit card company. At the same time, the Consumer Financial Protection Bureau, the primary federal watchdog for credit card practices, has been largely sidelined since Trump took office.

Bank lobbyists have long argued that capping interest rates would force lenders to reduce lending to borrowers with weaker credit profiles. They point to past experience as evidence. When Congress capped certain fees that large banks could charge merchants for debit card transactions, many banks responded by eliminating debit card rewards programs. Those perks only gradually returned years later, and in more limited forms.

The United States already imposes interest rate limits on certain financial products and specific groups. Under the Military Lending Act, lenders are prohibited from charging active-duty service members more than 36% interest on most financial products. Separately, federal regulators cap interest rates on credit union credit cards at 18%.

Credit card companies generate revenue from three main sources: fees charged to merchants, fees charged directly to consumers, and interest on outstanding balances. Critics of the industry argue that merchant fees alone are substantial enough to sustain profitability even if interest rates were sharply reduced.

“A 10% credit card interest cap would save Americans $100 billion a year without causing massive account closures, as banks claim,” said Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, who studied the potential effects of the proposal. “The largest banks that dominate this market are making enormous profits on customers across all income levels.”

The White House did not respond to questions about whether Trump plans to pursue the cap through executive authority or legislation, or whether the administration has consulted with major credit card issuers about the proposal.

Sen. Roger Marshall, a Republican from Kansas who said he spoke with Trump on Friday night, framed the effort as a consumer protection measure. He said the goal is to “lower costs for American families and rein in greedy credit card companies that have been ripping off hardworking Americans for too long.”

Momentum for legislation already exists on Capitol Hill. Earlier this year, Sen. Bernie Sanders, an independent from Vermont, and Sen. Josh Hawley, a Republican from Missouri, introduced a bipartisan proposal that would cap credit card interest rates at 10% for five years. They have argued that Trump’s long-standing campaign promise could help propel the measure forward.

In the House, Reps. Alexandria Ocasio-Cortez of New York and Anna Paulina Luna of Florida have put forward similar legislation. Ocasio-Cortez is a frequent critic of Trump, while Luna is a close ally of the president, underscoring the unusual cross-party alignment the issue has generated.

Even so, the path forward remains uncertain. With fierce opposition from Wall Street and unresolved questions about enforcement, Trump’s proposal has opened a new and potentially contentious front in the broader debate over consumer debt, bank regulation and the cost of living for American households.