Trump's Proposal to Cap Credit Card Interest Rates at 10%

Former President Donald Trump has recently put forth a proposition to implement a temporary 10% cap on credit card interest rates, expressing concerns over what he perceives as exploitative practices by credit card issuers. This announcement has ignited a debate surrounding consumer financial protection and the regulatory powers of the executive branch, especially given the rising trend in credit card interest rates over recent years. The initiative seeks to alleviate the financial burden on consumers, a move that could have profound implications for both cardholders and the financial industry.

The discussion surrounding credit card interest rates has gained prominence amidst a backdrop of escalating financial burdens on consumers. By November 2025, the average credit card interest rate had surged to 22.3%, a notable increase from 13.9% a decade earlier, according to Federal Reserve data. This upward trajectory is partly attributed to a rise in credit card delinquencies and the Federal Reserve's sustained high interest rates, which influence various consumer lending products. Despite recent rate cuts by the central bank, benchmarks for mortgages, credit cards, and other consumer borrowing remain elevated, contributing to the financial strain experienced by many households.

Trump's declaration, made aboard Air Force One, highlighted his determination to curb what he termed the 'abusive' practices of credit card companies. He articulated a desire for the 10% cap to take effect on January 20th, coinciding with the anniversary of his hypothetical second-term inauguration, implying that non-compliance would constitute a legal violation. However, the exact mechanism through which such a cap would be enforced—whether via executive order, new legislation, or other means—has not been explicitly detailed. This ambiguity raises questions about the presidential authority to unilaterally impose such a significant financial regulation without congressional approval.

The concept of capping credit card interest rates is not new to the American political landscape. Previous legislative efforts, including a bipartisan bill co-sponsored by Senators Bernie Sanders and Josh Hawley, have sought to introduce a temporary 10% cap. Despite these attempts, such proposals have largely failed to advance through Congress. Senator Sanders, notably, criticized Trump for not fulfilling an earlier campaign promise to enact similar limits, labeling the inaction as 'unacceptable.' Concurrently, Senator Elizabeth Warren, a key figure in the establishment of the Consumer Financial Protection Bureau (CFPB) in 2010, echoed concerns about the administration's perceived efforts to undermine the agency, which was designed to safeguard consumers from predatory financial practices.

The financial industry has reacted with apprehension to Trump's proposal. Following his announcement, bank stocks experienced a decline. Industry groups, such as the Bank Policy Institute (BPI), voiced concerns that while they share the goal of accessible credit, a stringent cap could have detrimental effects on consumers and small businesses. The BPI warned that such a measure might force banks to restrict credit access for a significant portion of cardholders who carry monthly balances, potentially leading to increased minimum payment requirements and pushing consumers towards less regulated and more expensive alternative lending options. The institute previously characterized a similar Senate bill as 'draconian,' underscoring the potential negative repercussions for the credit market and consumer financial health.

The proposition by former President Trump to impose a 10% ceiling on credit card interest rates represents a significant policy debate within the broader context of consumer finance and government regulation. This initiative, spurred by concerns over elevated interest rates and the financial burden on the populace, underscores ongoing discussions about the balance between market mechanisms and consumer protection. The effectiveness and feasibility of such a cap, alongside its potential ramifications for the financial sector and cardholders, continue to be subjects of intense scrutiny and political discourse.