Banking industry warns Americans over Trump’s 10% credit card cap

President Donald Trump has done another about face on the topic of “affordability” for Americans. The issue helped return him to the White House in the 2024 elections but his lack of action on the matter had him calling it a Democratic hoax by the end of last year.

However, he hasn’t be able to convince the American public that their financial woes are the fault of his predecessor, former President Joe Biden, with 61% telling CNN that economic conditions in the US have worsened under Trump’s second administration. This has prompted the president to revive a campaign promise of capping credit card interest rates at 10% in a Truth Social post on Friday.

“We will no longer let the American Public be ‘ripped off’ by Credit Card Companies that are charging Interest Rates of 20 to 30%, and even more,” Trump said on social media, adding, “AFFORDABILITY!”

He said that the policy would take effect on 20 January on the one-year anniversary of his second inauguration. Trump said that the 10% cap would stay in place for a year. According to Bankrate, the currently weekly national average credit card interest rate is 19.65%.

Banking industry warns Trump’s 10% credit card cap is bad for Americans

Trump’s proposal has bipartisan backing in Congress with Senators Bernie Sanders and Josh Hawley introducing legislation in the Senate as well as US Representatives Alexandria Ocasio-Cortez and Anna Paulina Luna in the lower chamber last year. However, the banking industry warned in a letter to Senate Majority Leader John Thune and Minority Leader Chuck Schumer that such a move “would have a devastating effect on access to credit for individuals and small business owners.”

“[Credit card] issuers would be compelled to reduce or eliminate access to credit for all but the lowest-risk customers,” the American Bankers Association and 52 state bankers associations cautioned.

Analysis finds capping credit card interest rates would save Americans billions and issuers would still make profits

Brian Shearer at Vanderbilt Policy Accelerator conducted an analysis of the proposal put forth to cap credit card interest rates and found that “contrary to industry claims, [it] could return tens of billions of dollars to Americans without significantly impeding access to credit cards or popular rewards programs.”

The analysis found that an 18% or 15% cap would save Americans substantial amounts and would have no impact to rewards or lending volumes. Though it points out that a 10% cap would lead to reductions in rewards for cardholders with FICO credit scores of 760 or less of roughly $27 billion, but that they would save those same customers more than three times that amount in interest.

“The credit card industry is so profitable that it could rein in interest rates, save billions for Americans and small businesses, and still make profits,” Shearer said.

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