Trump calls for 10% credit card interest rate cap; banks push back

Industry Opposition

The banking industry responded with a joint statement. The American Bankers Association and allied groups said the proposal would push consumers toward less regulated and more costly borrowing options.

“If enacted, this cap would only drive consumers toward less regulated, more costly alternatives,” the groups said.

Bank lobbyists have long argued that limiting interest rates on credit card products forces lenders to curtail credit lines for higher-risk borrowers, potentially steering them toward payday lenders and pawnshops. When Congress enacted a cap on interchange fees that stores pay large banks when customers use debit cards, banks eliminated rewards on those cards; perks only recently returned.

Scale of Americans’ Credit Card Debt

Americans are carrying more credit card debt than ever recorded. The New York Federal Reserve reported total credit card balances at $1.23 trillion for the third quarter of 2025. The Consumer Financial Protection Bureau reported that about 195 million Americans held credit cards in 2024 and were assessed $160 billion in interest charges during that year.

Average credit card interest rates stood between 19.65% and 21.5%, according to the Federal Reserve and industry tracking sources — near the highs since federal regulators began tracking credit card rates in the mid-1990s. About a decade ago, the average credit card interest rate was roughly 12%, the AP reported.

Research on the Proposal’s Impact

Researchers who studied Trump’s campaign pledge after it was first announced found that Americans would save roughly $100 billion annually if credit card rates were capped at 10%. The same researchers found that the credit card industry would still be profitable under a cap, though rewards and other perks might be scaled back.

Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, who wrote the research on the industry impact of Trump’s proposal, said the largest banks remain highly profitable across their customer base.

“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,” Shearer said.

However, Shearer’s research also found that a 10% cap would likely result in banks lending less to borrowers with credit scores below 600. Arkansas, which maintains a strictly enforced 17% interest rate cap, provides a historical example: evidence points to lower-income and less creditworthy borrowers being cut out of consumer credit markets in that state, according to the AP.

Bipartisan Legislative Proposals

Trump’s announcement arrives as proposals to cap credit card rates have already gathered cross-party support in Congress. Sens. Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., released a plan in February that would immediately cap rates at 10% for five years. Reps. Alexandria Ocasio-Cortez, D-N.Y., and Anna Paulina Luna, R-Fla., have proposed similar legislation in the House.

Marshall framed the effort as a consumer protection measure. 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,” Marshall said.

Regulatory Context

The U.S. already imposes interest rate limits on some financial products and for certain borrowers. The Military Lending Act makes it illegal to charge active-duty service members more than 36% interest on any financial product. The national regulator for credit unions caps interest rates on credit union credit cards at 18%.

Credit card companies earn revenue from three sources: fees charged to merchants, fees charged to customers, and interest charged on balances. Some researchers and policymakers have argued that banks earn enough from merchant fees to remain profitable if interest rates were capped.

Administration’s Record With the Industry

The Republican administration has been favorable to the credit card industry since Trump took office. Capital One faced little resistance from the White House when it finalized its acquisition of 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 pursuing credit card companies for alleged wrongdoing, has been largely nonfunctional since Trump took office.