Trump pushes a 1-year, 10% cap on credit card interest rates and banks
balk
[January 12, 2026] By
KEN SWEET and SEUNG MIN KIM
NEW YORK (AP) — Reviving a campaign pledge, President Donald Trump wants
a one-year, 10% cap on credit card interest rates, a move that could
save Americans tens of billions of dollars but drew immediate opposition
from an industry that has been in his corner.
Trump was not clear in his social media post Friday night whether a cap
might take effect through executive action or legislation, though one
Republican senator said he had spoken with the president and would work
on a bill with his “full support.” Trump said he hoped it would be in
place Jan. 20, one year after he took office.
Strong opposition is certain from Wall Street in addition to the credit
card companies, which donated heavily to his 2024 campaign and have
supported Trump's second-term agenda. Banks are making the argument that
such a plan would most hurt poor people, at a time of economic concern,
by curtailing or eliminating credit lines, driving them to high-cost
alternatives like payday loans or pawnshops.
“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.
Researchers who studied Trump’s campaign pledge after it was first
announced found that Americans would save roughly $100 billion in
interest a year if credit card rates were capped at 10%. The same
researchers found that while the credit card industry would take a major
hit, it would still be profitable, although credit card rewards and
other perks might be scaled back.
About 195 million people in the United States had credit cards in 2024
and were assessed $160 billion in interest charges, the Consumer
Financial Protection Bureau says. Americans are now carrying more credit
card debt than ever, to the tune of about $1.23 trillion, according to
figures from the New York Federal Reserve for the third quarter last
year.
Further, Americans are paying, on average, between 19.65% and 21.5% in
interest on credit cards according to the Federal Reserve and other
industry tracking sources. That has come down in the past year as the
central bank lowered benchmark rates, but is near the highs since
federal regulators started tracking credit card rates in the mid-1990s.
That’s significantly higher than a decade ago, when the average credit
card interest rate was roughly 12%.
The Republican administration has proved particularly friendly until now
to the credit card industry.
Capital One got little resistance from the White House when it finalized
its purchase and merger with Discover Financial in early 2025, a deal
that created the nation’s largest credit card company. The Consumer
Financial Protection Bureau, which is largely tasked with going after
credit card companies for alleged wrongdoing, has been largely
nonfunctional since Trump took office.
In a joint statement, the banking industry was opposed to Trump's
proposal.
“If enacted, this cap would only drive consumers toward less regulated,
more costly alternatives," the American Bankers Association and allied
groups said.
Bank lobbyists have long argued that lowering interest rates on their
credit card products would require the banks to lend less to high-risk
borrowers. When Congress enacted a cap on the fee that stores pay large
banks when customers use a debit card, banks responded by removing all
rewards and perks from those cards. Debit card rewards only recently
have trickled back into consumers' hands. For example, United Airlines
now has a debit card that gives miles with purchases.
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Visa and Mastercard credit cards are shown in Buffalo Grove, Ill.,
Feb. 8, 2024. (AP Photo/Nam Y. Huh, File)
 The U.S. already places interest
rate caps on some financial products and for some demographics. The
Military Lending Act makes it illegal to charge active-duty service
members more than 36% for any financial product. The national
regulator for credit unions has capped interest rates on credit
union credit cards at 18%.
Credit card companies earn three streams of revenue
from their products: fees charged to merchants, fees charged to
customers and the interest charged on balances. The argument from
some researchers and left-leaning policymakers is that the banks
earn enough revenue from merchants to keep them profitable if
interest rates were capped.
"A 10% credit card interest cap would save Americans $100 billion a
year without causing massive account closures, as banks claim.
That’s because the few large banks that dominate the credit card
market are making absolutely massive profits on customers at all
income levels," said Brian Shearer, director of competition and
regulatory policy at the Vanderbilt Policy Accelerator, who wrote
the research on the industry's impact of Trump's proposal last year.
There are some historic examples that interest rate caps do cut off
the less creditworthy to financial products because banks are not
able to price risk correctly. Arkansas has a strictly enforced
interest rate cap of 17% and evidence points to the poor and less
creditworthy being cut out of consumer credit markets in the state.
Shearer's research showed that an interest rate cap of 10% would
likely result in banks lending less to those with credit scores
below 600.
The White House did not respond to questions about how the president
seeks to cap the rate or whether he has spoken with credit card
companies about the idea.
Sen. Roger Marshall, R-Kan., who said he talked with Trump on Friday
night, said the effort is meant to “lower costs for American
families and to reign in greedy credit card companies who have been
ripping off hardworking Americans for too long."
Legislation in both the House and the Senate would do what Trump is
seeking.
Sens. Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., released a plan
in February that would immediately cap interest rates at 10% for
five years, hoping to use Trump’s campaign promise to build momentum
for their measure.
Hours before Trump's post, Sanders said that the president, rather
than working to cap interest rates, had taken steps to deregulate
big banks that allowed them to charge much higher credit card fees.
Reps. Alexandria Ocasio-Cortez, D-N.Y., and Anna Paulina Luna, R-Fla.,
have proposed similar legislation. Ocasio-Cortez is a frequent
political target of Trump, while Luna is a close ally of the
president.
___
Seung Min Kim reported from West Palm Beach, Fla.
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