Trump’s Interest Rate Proposal for Credit Cards
President Trump marked January 20 as the deadline for a plan that aims to reduce credit card interest rates to 10% for a year. Although that date has arrived, most banks and credit card issuers have kept their rates steady, expressing opposition due to a lack of necessary policy details for compliance.
On January 9, Trump announced this cap, giving banks only 11 days to adapt. He stated his goal is to protect Americans from being “ripped off” by credit card companies charging exorbitant rates, which have reportedly increased under the Biden administration.
This proposal has gained support from both Republican and Democratic lawmakers, including Senators Elizabeth Warren and Josh Hawley. If successful, it could save consumers around $100 billion annually in interest payments. However, the banking industry has warned that it could lead to reduced credit access for millions.
Credit card interest rates have generally decreased recently, influenced by the Federal Reserve’s interest rate adjustments in 2025. As of late December, the average annual percentage rate (APR) stood at 19.7%, slightly lower than the previous peak in August 2024.
Many banks now offer zero APR cards for an introductory period, typically lasting 12 to 15 months, after which the rates can rise significantly, often between 17% to 27%, depending on credit scores. Trump’s proposal would cap these rates at 10%, aligning with existing cards that exceed that level.
White House press secretary Caroline Levitt indicated that Trump expects credit card companies to follow through on this request. She commented on January 16, “I’m not going to lay out specific results, but certainly this is the president’s expectation and frankly his request.”
The administration hasn’t clarified how it plans to enforce the policy or check bank compliance with the proposed rules.
Expert Opinions
Banking officials, including lobbyists, express confusion regarding their response to the proposed cap. Currently, there’s no law or executive order mandating that lenders charge 10% or less on credit cards, nor is there a federal standard limiting credit card interest rates.
Experts suggest that implementing an interest rate cap would likely require legislative approval. There’s talk that Trump might garner support for bipartisan initiatives like a bill introduced by Senator Bernie Sanders in 2025, which researchers believe could save consumers $100 billion yearly in interest costs.
If such legislation passes, banks would need to comply, but attempting to enact interest rate caps through executive action might prove unenforceable.
Reactions from the Banking Sector
Bankers believe that implementing APR caps could hurt profits, potentially leading to credit reductions for vulnerable borrowers. A survey on January 12 indicated that two-thirds of credit card users with balances could see their limits cut or canceled altogether. Particularly affected would be the nearly 47 million Americans with subprime credit scores.
In contrast, financial analysts argue that the proposed cap is unlikely to impact wealthier customers significantly. “Americans with investments and solid jobs generally aren’t the same individuals struggling with credit card debt,” explained Nick Hallman from Betterment.
JPMorgan Chase’s Chief Financial Officer, Jeremy Burnham, highlighted concerns during a January 12 investor call, suggesting that the proposed cap could restrict access to credit, especially for those who need it most, which could have broad negative implications for both consumers and the economy.
As this plays out, one fintech company, Bild, has announced a new credit card that aligns with Trump’s proposal, featuring a capped interest rate of 10% for the first year.
