Former President Donald Trump has proposed a one-year, 10% cap on credit card interest rates, announced via social media. The proposal, intended to take effect on January 20, 2026, aims to address rising credit card debt and interest rates, which are currently near historical highs. While some researchers estimate significant annual savings for consumers, banking industry groups have raised concerns that such a cap could reduce credit availability for certain borrowers and potentially direct consumers toward less regulated financial options. The announcement coincided with declines in financial services stocks.
Proposal Details
On Friday, former President Donald Trump announced via his Truth Social platform a proposal for a one-year cap on credit card interest rates, limiting them to 10%. He stated the cap should take effect on January 20, 2026, which he noted as the anniversary of his potential return to the White House. Trump did not specify the mechanism for implementing the cap, such as through voluntary industry participation, government enforcement, executive order, or legislation. Senator Roger Marshall (R-Kan.) confirmed discussions with Trump and indicated his commitment to developing a bill with the former president's support.
Context of Credit Card Debt and Rates
The proposal comes amidst record levels of U.S. credit card debt and high average interest rates.
- U.S. credit card debt surpassed $1.1 trillion, reaching approximately $1.17 trillion in the third quarter of 2024, and about $1.23 trillion in the third quarter of the previous year. This figure increased from $770 billion in the first quarter of 2021.
- Around 195 million people in the United States held credit cards in 2024, incurring an estimated $160 billion in interest charges.
- Average credit card interest rates are currently between 19.65% and 21.5%, and reached 22.3% as of November 2025, up from 13.9% a decade prior. These rates are near historical highs tracked since the mid-1990s.
- The increase in rates is partly attributed to a rise in delinquencies and elevated interest rates set by the Federal Reserve, whose benchmark rates are currently between 3.5% and 3.75%.
Stated Rationale and Implementation Questions
Trump cited "AFFORDABILITY!" as the rationale for the temporary cap, linking it to cost-of-living issues and attributing high credit card rates to former President Joe Biden. He stated his intent to prevent credit card companies from "ripping off" the American public and to address current interest rates, which he described as ranging from 20% to 30%. The proposal revives a pledge made during his 2024 presidential campaign. Questions remain regarding the specific governmental means by which such a cap would be enforced without congressional legislation.
Potential Economic and Consumer Impact
Researchers who previously analyzed Trump's campaign pledge estimated that a 10% cap could save Americans approximately $100 billion in interest annually. They also projected that the credit card industry would likely remain profitable, though card rewards and other perks might be reduced. Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, whose research informed these projections, asserted that a 10% cap would achieve significant savings for Americans without causing widespread account closures, given the substantial profits generated by large banks in the credit card market. However, Shearer's research also indicated that a 10% cap would likely reduce lending to those with credit scores below 600.
Industry and Expert Responses
Reactions to Trump's proposal have been varied:
- Banking Industry Groups, including the Bank Policy Institute (BPI) and the American Bankers Association, expressed strong opposition. They acknowledged the goal of helping Americans access affordable credit but warned that a 10% cap would:
- Reduce credit availability, particularly for lower-income individuals or those with lower credit scores.
- Potentially push consumers toward less regulated and more costly financial alternatives, such as payday loans or pawnshops.
- Be "devastating" for families and small business owners.
- Lead an estimated two-thirds of cardholders who carry a balance to lose access to or have their credit lines limited, and could cause minimum payment requirements to rise.
- They referenced historical examples, such as a past cap on debit card merchant fees, which led to the removal of rewards and perks from those cards.
- Bill Ackman, a hedge fund manager, expressed concern that a 10% cap could result in credit card cancellations for millions of Americans, especially those with subprime credit risk, as companies might struggle to cover losses or earn adequate returns.
- Senator Elizabeth Warren (D-Mass.) voiced skepticism about Trump's ability to implement such a cap without congressional approval and criticized his past actions regarding the Consumer Financial Protection Bureau.
- Senator Josh Hawley (R-Mo.) supported the announcement, indicating his willingness to vote for such a measure.
Legislative Background and Existing Regulations
The proposal aligns with previous legislative efforts. Senators Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.) previously introduced a bipartisan bill in February 2025 that sought to cap credit card interest rates at 10% for five years. That bill encountered significant opposition from banking groups and did not advance in Congress. Senator Sanders had criticized Trump shortly before his announcement for not fulfilling a previous campaign pledge regarding a rate cap. Similar legislative proposals have also been introduced in the House by Representatives Alexandria Ocasio-Cortez (D-N.Y.) and Anna Paulina Luna (R-Fla.).
The U.S. already has interest rate caps on certain financial products and for specific demographics. The Military Lending Act limits interest rates for active-duty service members to 36%, and the national regulator for credit unions caps credit union credit card rates at 18%. Historical examples, such as Arkansas's 17% interest rate cap, suggest that such limits can restrict access to consumer credit for less creditworthy individuals.
During his previous administration, Trump's actions contrasted with the current proposal. His administration opposed the Biden administration's $8 credit card late fee limit, which was estimated to save families over $10 billion annually. A federal judge initially blocked this effort, and the Trump administration previously sided with banks that sued to stop the rule's enactment. Trump's administration also worked to change the Consumer Financial Protection Bureau (CFPB), a financial watchdog agency currently involved in a lawsuit concerning its funding.
Financial Market Reaction
Following Trump's announcement, financial services stocks experienced declines.
- Citi Group lost nearly 4% in premarket trading.
- JPMorgan Chase saw a 3% decrease.
- Bank of America fell 2.45%.
- Payment processing companies Visa and Mastercard decreased by 1.58% and 2%, respectively.
- Broader finance sector companies like Wells Fargo (down 2%) and PayPal (down 0.26%) also registered losses.