In a renewed effort to address consumer affordability ahead of the impending US midterm elections, President Donald Trump has proposed instituting a 10% ceiling on credit card interest rates for a one-year period. This initiative, unveiled recently, has captured widespread attention amidst growing concerns about the high cost of credit and its impact on American households.
The average credit card interest rate currently stands at approximately 19.64%, according to Bankrate data, nearly doubling the level proposed by the President’s cap. Trump’s plan, intended to take effect by January 20, faces significant hurdles in implementation, as enacting such a cap would require legislative approval by Congress or voluntary cooperation from credit card issuers, neither of which appears guaranteed at this time.
The proposal aims to alleviate the financial burden on consumers grappling with record levels of credit card debt. Data from the Federal Reserve Bank of New York reveal that outstanding credit card balances reached $1.23 trillion in the third quarter of 2025, marking a yearly increase of 5.75% and hitting the highest point since 1999.
While the initiative has won support from consumer advocates pointing to potential savings in the tens of billions annually, it has prompted pointed opposition from top banking executives who caution against the broader economic ramifications. Mark Mason, CFO of Citigroup, emphasized that capping interest rates could "restrict access to credit to those who need it the most and, frankly, would have a deleterious impact on the economy." Similarly, Bank of America CEO Brian Moynihan indicated that lowering interest rate caps might constrict consumer credit availability, warning of unforeseen consequences despite his commitment to affordability.
A number of prominent politicians across party lines have previously introduced legislation aimed at limiting credit card interest rates, including figures such as Independent Senator Bernie Sanders, Republican Senator Josh Hawley, and Democratic Representative Alexandria Ocasio-Cortez. However, these efforts have generally failed to advance, and opposition remains strong within the financial sector.
Republican former Senator Pat Toomey labeled the proposal a “very bad idea,” suggesting that it would ultimately lead to decreased credit access for consumers. On the same note, executives from leading financial institutions remain unequivocal in their resistance to the cap. Jane Fraser, Citigroup’s Chair and CEO, conveyed skepticism regarding Congressional enthusiasm for such a legislative move.
Industry analysts highlight that credit card interest rates are a critical revenue source for banks and credit issuers. Steve Biggar, director of financial services research at Argus Research, explained that a reduction in profitability due to rate caps would likely prompt banks to withdraw from certain credit markets, as underwriting such lending becomes financially unfeasible.
The proposal also intersects with discussions about credit card rewards programs. Research conducted by Brian Shearer of the Vanderbilt Policy Accelerator estimated that a 10% interest rate cap could yield American consumers approximately $100 billion in annual savings through reduced interest payments. Although rewards for consumers with FICO scores under 760 would decline by about $27 billion, overall net savings would remain significant.
Shearer acknowledged that while lending might decrease marginally and rewards programs would contract, the scenario would not reflect a “sky-is-falling” circumstance as banks have suggested. However, he also noted that some advertising expenditures by banks could be curtailed in response.
Critics point out that this proposal appears at odds with President Trump’s prior regulatory stance. Last year, he rolled back a Biden administration-era rule capping late fees at $8, a regulation that was intended to protect consumers but faced legal challenges. Aaron Klein of the Brookings Institute characterized the current proposal as a reactionary measure that does not comprehensively address affordability issues.
Furthermore, Rohit Chopra, former director of the Consumer Financial Protection Bureau (CFPB) who was dismissed under Trump’s administration, expressed doubts about the proposal’s implementation prospects. He underscored that while interest rate caps would offer meaningful reform, the credit card industry believes the President may ultimately retreat from enforcing such measures.
Trump’s proposal, thus, lays bare the tension between efforts to enhance consumer affordability and the financial industry’s imperative to maintain revenue streams. The unfolding dialogue underscores fundamental questions about credit access, regulatory intervention, and economic trade-offs ahead of critical elections.