NEW YORK (AP) — President Donald Trump is looking to bring back an earlier campaign promise to impose a one-year limit on credit card interest rates at 10%. He believes this could potentially provide significant savings for Americans. Despite investing tens of billions in funding, he faces immediate pushback from the industry he has previously relied upon.
On Friday night, Trump did not clarify if the cap would be implemented via executive action or through legislation. However, a Republican senator mentioned he had a conversation with Trump and intends to support the bill. The president aims for the cap to take effect on January 20, marking one year since he took office.
There’s likely to be strong resistance from Wall Street and credit card companies, which have heavily invested in the 2024 election and backed Trump’s second-term policies. Banks contend that such a cap could adversely affect those with lower incomes during economic downturns by limiting credit options and pushing them toward costlier alternatives like payday loans and pawnshops.
“We will no longer allow the American people to be defrauded by credit card companies that charge 20% to 30% interest,” Trump stated on his platform Truth Social.
Researchers who analyzed Trump’s original promise found that capping credit card interest rates at 10% could save Americans around $100 billion annually. Although the credit card industry would face substantial impacts, it is predicted that it would remain profitable, albeit possibly at the expense of rewards and other perks.
In 2024, around 195 million Americans owned credit cards, racking up $160 billion in interest charges. Current statistics show that credit card debt has reached unprecedented levels, totaling about $1.23 trillion as of the third quarter last year.
According to the Federal Reserve and various industry sources, Americans are currently paying between 19.65% to 21.5% in interest on credit cards. While this average has decreased slightly in the past year due to lower central bank rates, it remains close to the highest levels seen since tracking began in the mid-1990s. It’s a stark contrast to just a decade ago when the average rate was around 12%.
Historically, Republican administrations have been very accommodating toward the credit card industry. For instance, when Capital One completed significant acquisitions, there was minimal resistance from the White House. In early 2025, this was followed by the creation of the largest credit card company in the United States. Although the Consumer Financial Protection Bureau aims to combat fraud in this sector, it has been largely ineffective since Trump’s administration began.
In response to Trump’s proposal, the banking industry issued a joint statement declaring their opposition. The American Bankers Association cautioned that enacting such a cap would simply push consumers toward less regulated and more expensive borrowing options.
Bank lobbyists have long claimed that reducing interest rates on credit card products would lead to banks making fewer loans to high-risk borrowers. For instance, when Congress limited the fees stores pay banks for debit card transactions, banks responded by removing many perks from those cards. Only recently have some of those perks made a return for consumers.
In the U.S., there are already interest rate caps on certain financial products. For example, the Military Lending Act prevents charging active-duty military personnel more than 36% for financial products, while credit union regulators cap credit card interest at 18%.
There are claims from some researchers and progressive policymakers that banks still earn substantial profits from fees charged to merchants, indicating they could remain profitable even with capped interest rates.
“Implementing a 10% interest rate cap, as claimed by the banks, could save Americans $100 billion annually without triggering widespread account closures. They are making enormous profits off their customers,” remarked Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator.
There are past instances where interest rate caps restricted access to lower-quality financial products due to banks’ inability to adequately price risk. Research shows that in Arkansas, capping rates at 17% led to many low-income individuals being excluded from the credit market. Shearer’s studies suggest a similar cap at 10% would likely limit lending to individuals with credit scores below 600.
When asked about how the president intends to enforce the cap or any discussions with credit card companies, the White House did not comment.
Sen. Roger Marshall (R-Kansas), who spoke with Trump recently, described the initiative as a way to “lower costs for American families and curb the greed of credit card companies that have taken advantage of hardworking Americans for too long.”
If both the House and Senate approve the bill, it would fulfill Trump’s objectives.
Earlier in February, Senators Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., proposed a similar plan to immediately cap interest rates at 10% for five years, in hopes of gaining momentum from Trump’s campaign promises.
In a critical statement prior to Trump’s announcement, Sanders argued that instead of capping interest rates, the president had indeed taken steps that enable large banks to impose much higher credit card fees.
Representatives Alexandria Ocasio-Cortez (D-NY) and Anna Paulina Luna (R-FL) have also introduced parallel legislation. Notably, Ocasio-Cortez frequently finds herself as a target of Trump, while Luna is considered one of his close allies.
