Trump's 10% Credit Card Interest Rate Cap: What It Means for Your Wallet (And Why Banks Are Pushing Back)

So here we are again… talking about credit card debt.

I know, I know. It's not exactly the most fun topic to dive into on a Saturday morning. But if you're like most Americans right now, carrying a balance on at least one credit card and wincing every time you see that interest charge on your statement, this news might actually matter to you.

President Trump just called for a one-year cap on credit card interest rates at 10%, effective January 20, 2026. That's exactly one year after his second inauguration. The announcement came via Truth Social late Friday night, and... well, let's just say the banking industry isn't exactly thrilled about it.

But before we get into the drama (and trust me, there's plenty), let's talk about what this actually means for you.

The Current State of Credit Card Interest Rates: It's Rough Out There

Here's the thing nobody really wants to admit: credit card interest rates are currently averaging around 21% to 23%, depending on which source you check and what type of card you're looking at.

Read that again. Twenty. One. Percent.

And if you've got less-than-stellar credit? You're probably looking at rates between 24% and 28%, with some subprime cards charging as much as 36%. Yeah... it's genuinely brutal.

To put this in perspective, just a decade ago, the average credit card interest rate was roughly 12%. So we're talking about rates that have nearly doubled in ten years. And while the Federal Reserve has started cutting rates, they made three quarter-point cuts in 2025, those savings haven't exactly trickled down to your credit card statement the way you'd hope.

What This Costs Real People

Let's make this concrete for a second.

Say you're carrying $7,000 in credit card debt (which is pretty close to the national average for households with debt). If you're paying $250 a month at today's average rate of around 23.79%, here's what you're looking at:

• Time to pay off: 41 months (that's over 3 years)
• Total interest paid: About $3,314

Now imagine that same scenario with a 10% interest rate cap. The math changes pretty dramatically. You're still looking at a long payoff period, but the interest burden drops significantly.

And when you multiply that across millions of Americans... researchers estimate this cap could save Americans roughly $100 billion in interest annually.

That's not pocket change.

What Trump Actually Proposed (And What He Didn't)

Okay, so here's where things get a little... vague.

Trump's Truth Social post called for a one-year cap on credit card interest rates at 10%, starting on January 20, 2026. But, and this is a pretty big but, he didn't exactly spell out how this would happen.

Would it be through:

• Executive action?
• Voluntary compliance from credit card companies?
• Congressional legislation?

Nobody really knows yet. The White House hasn't responded to questions about the specifics, and Trump's post was characteristically light on implementation details.

What we do know is that Senator Roger Marshall (R-Kansas) said he spoke with Trump Friday night and plans to work on legislation with the president's "full support". So there's at least some movement toward making this a real bill rather than just a social media announcement.

This Isn't Actually New

Here's something interesting: this isn't the first time Trump has floated this idea. He made similar promises on the campaign trail back in September 2024. And he's not alone in pushing for interest rate caps.

Senators Bernie Sanders (I-Vermont) and Josh Hawley (R-Missouri) introduced legislation last February that would cap credit card interest rates at 10% for five years, not just one year like Trump's proposal. That bill has been sitting in Congress ever since, going nowhere fast.

The fact that you've got Bernie Sanders and Josh Hawley, who agree on basically nothing else, both supporting this idea? That tells you something about how frustrated Americans are with current credit card rates.

Why Banks Are Absolutely Freaking Out

So... about those banks.

Within hours of Trump's announcement, the banking industry came out swinging. The Bank Policy Institute, American Bankers Association, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America issued a joint statement that was basically a masterclass in polite opposition.

Their main arguments? Let me break them down:

Argument #1: "This Would Actually Hurt Consumers"

The banking industry's primary talking point is that a 10% interest rate cap would reduce credit availability. Their joint statement claimed this cap "would be devastating for millions of American families and small business owners who rely on and value their credit cards".

The logic goes like this: if banks can't charge higher interest rates to offset the risk of lending to people with lower credit scores, they'll simply stop issuing cards to those people altogether. And then those consumers would be forced to turn to payday lenders, pawn shops, or worse.

In a letter last year, banking trade groups warned that consumers could be "forced to turn elsewhere for short-term financing needs, including pawn shops, auto title lenders or worse, such as loan sharks, unregulated online lenders and the black market".

Pretty dramatic, right?

Argument #2: "We Need High Rates Because Credit Cards Are Risky"

Banks have long argued that credit card debt needs higher interest rates because it's unsecured, there's no house or car to repossess if you default. After the financial crisis, charge-off rates on credit cards soared north of 10%, while those on residential real estate loans stayed below 3%.

Fair point, honestly. Credit cards are riskier for banks than mortgages.

But here's where it gets interesting...

The Profitability Question

While banks are crying poverty and warning about devastating consequences, the numbers tell a slightly different story.

In 2024, JPMorgan reported the net yield on its more than $200 billion in card loans was 9.73%, which drove the bulk of the $25.5 billion of revenue for its card services.

Let me repeat that: $25.5 billion in revenue from card services. For one bank.

And that research I mentioned earlier? The researchers found that while the credit card industry would take a major hit from a 10% cap, it would still be profitable, although credit card rewards and other perks might be scaled back.

So yeah... banks would make less money. But they wouldn't be operating at a loss.

Who Would Actually Lose Access?

There's one part of the banking industry's argument that does hold some water, though.

Research showed that an interest rate cap of 10% would likely result in banks lending less to those with credit scores below 600. And there's historical precedent for this: 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.

So if you're someone with a credit score in the 500s or low 600s... this cap might actually make it harder for you to get a credit card. Which is kind of ironic, considering the cap is supposed to help people who are struggling financially.

The Political Weirdness of This Moment

Can we just acknowledge how strange this political moment is?

You've got Trump, who's generally been very friendly to big banks during his administration, going after one of their most profitable business lines. 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.

And the same banks that donated heavily to Trump's 2024 campaign are now publicly opposing him on this.

Meanwhile, Representatives Alexandria Ocasio-Cortez (D-New York) and Anna Paulina Luna (R-Florida) have both proposed similar legislation. AOC and a Trump ally... agreeing on something. In 2026.

What a time to be alive.

What You Should Actually Do About This

Okay, so... real talk for a minute.

While this proposal is making headlines and generating plenty of heat, we have no idea if it's actually going to happen. It could be:

• Genuine policy that makes it through Congress
• A trial balloon that quietly dies
• Political theater meant to show Trump is fighting for affordability concerns ahead of midterm elections
• Something that gets heavily modified into a completely different bill

So what should you do in the meantime?

Don't Wait for Congress to Save You

Here's my honest advice: don't base your financial decisions on proposed legislation that may or may not pass.

If you're carrying high-interest credit card debt right now, you've got options that don't require waiting for Washington:

1. Balance Transfer Cards

Many cards offer 0% introductory APR periods on balance transfers, typically lasting up to 21 months. Yes, you'll pay a balance transfer fee (usually 3-5%), but that's still way better than paying 23% interest for the next year or two.

The catch? You generally need good credit to qualify.

2. Debt Consolidation Loans

Personal loans typically offer lower fixed rates than credit cards. These loans can turn multiple high-rate balances into a single manageable payment with a defined payoff date.

3. The Nuclear Option: Pay It Down Aggressively

I know this one isn't sexy or particularly helpful if you're already stretched thin. But if you can throw extra money at your highest-interest cards, you'll save yourself thousands in interest regardless of what happens with this proposal.

If You're Shopping for a New Card

The better your credit score is, the lower you can expect your credit card interest rate to be. So if you're in the market for a new card:

• Check your credit score first
• Compare APR ranges (not just the rewards programs)
• Look for cards with 0% intro APR offers if you're planning a big purchase
• Read the fine print on when that intro rate expires

Why This Matters

Whether or not this specific proposal passes, the fact that it's being discussed at all tells us something important.

Americans are now carrying more credit card debt than ever, about $1.23 trillion in total. That's trillion with a T.

And people are struggling. When interest rates on credit cards are double what they were a decade ago, and wages haven't kept pace with inflation, and the cost of everything from groceries to rent has increased... yeah, people are feeling it.

This proposal is a symptom of a larger problem: consumer debt in America has reached levels that are genuinely unsustainable for millions of families.

The Rewards Question

One thing that hasn't gotten enough attention in this debate: what happens to credit card rewards if this cap passes?

Here's an uncomfortable truth, credit card rewards programs are essentially funded by people who carry balances. Federal Reserve research has found that billions of dollars are transferred annually from people who pay interest to people who earn rewards.

It's kind of a reverse Robin Hood situation, if we're being honest.

If a 10% interest rate cap passes, banks would almost certainly scale back rewards programs. So that sweet 2% cash back card you love? The travel points you've been racking up? Those might become less generous or disappear altogether.

Which means this proposal would have winners and losers even among consumers, not just among banks.

What Happens Next?

So where do we go from here?

Senator Roger Marshall said this 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". He's planning to draft legislation with Trump's support.

But getting something like this through Congress? That's going to be an uphill battle.

The banking industry has formidable lobbying power. When they see a common threat, they can band together quickly and build a coalition of allies. They've defeated similar proposals before.

That said, the political dynamics are weird enough right now that anything could happen. This is an issue with bipartisan appeal, both progressives and populist conservatives support it, even if they disagree on basically everything else.

The Timeline

Trump wants this in place by January 20, 2026. That's... ambitious, to put it mildly. It's also less than two weeks away as I'm writing this.

Even if Congress moved at lightning speed (which, let's be real, they won't), implementing something like this would take time. Banks would need to adjust their systems, regulators would need to issue guidance, and there would probably be legal challenges.

A more realistic timeline? If this passes at all, we're probably looking at implementation sometime in late 2026 or early 2027.

Look, I'm not going to pretend to know whether this proposal is good policy or bad policy. There are legitimate arguments on both sides.

What I do know is this: credit card interest rates at 20%+ are crushing millions of Americans right now. Something needs to change, whether it's this specific cap, stronger consumer protections, better financial education, or some combination of all three.

In the meantime? Focus on what you can control:

• Pay down high-interest debt as aggressively as you can
• Build an emergency fund so you're not relying on credit cards for unexpected expenses
• Improve your credit score to qualify for better rates
• Use balance transfer offers strategically if it makes sense for your situation

And keep an eye on this story. Because whether Trump's proposal passes or not, the conversation about credit card interest rates isn't going away anytime soon.

The stakes are too high, the debt levels are too massive, and too many people are struggling for this issue to just fade into the background.

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Frequently Asked Questions

Q: Would a 10% interest rate cap apply to all credit cards?

Based on the proposal, it would be a temporary one-year cap affecting all credit card companies. However, the specific implementation details haven't been clarified yet.

Q: What if I already have a credit card with a lower rate than 10%?

Your rate would stay the same or potentially go lower if your issuer chooses to reduce it. The cap sets a maximum, not a minimum.

Q: Could banks cancel my existing credit card if this passes?

Potentially, yes. Banks could choose to close accounts for riskier borrowers rather than extend credit at capped rates. This is one of the banking industry's main concerns.

Q: How would this affect my credit card rewards?

Banks would likely scale back rewards programs to offset lost revenue from lower interest rates. Your cash back percentages and travel points could become less generous.

Q: Is this proposal likely to actually pass?

It's unclear. While it has bipartisan support from some lawmakers, the banking industry strongly opposes it and has significant lobbying power. The political dynamics are unpredictable.

Q: What should I do right now if I'm carrying credit card debt?

Don't wait for potential legislation. Explore balance transfer cards, debt consolidation loans, or focus on paying down your highest-interest balances first.