U.S. President Donald Trump has suggested limiting credit card interest rates to 10 percent, aiming to ease financial burdens for consumers in the short term. However, experts warn that this move could trigger a broader credit crisis in the long run. Trump announced this proposal on Truth Social, giving credit card companies until Jan. 20 to comply with the cap, emphasizing protection for Americans against high rates reaching 20 or 30 percent.
With companies resisting the change, Trump is now pressing Congress to pass legislation to enforce the cap. While receiving bipartisan support, the proposal has drawn criticism from prominent Republican figures. Economist Joseph Brusuelas of RSM expressed concerns that setting an artificial interest rate cap could restrict credit availability, particularly impacting lower-income households reliant on credit for daily expenses. This restriction may lead to reduced spending and negatively affect the economy over time, potentially causing unemployment to rise.
The average U.S. credit card interest rate stood at 23.79 percent in January, with rates for subprime borrowers sometimes exceeding 30 percent. Trump’s initiative to cap rates aligns with promises made during his 2024 presidential campaign to address escalating household debt. The proposal has faced opposition from the banking sector, which heavily relies on interest rates for revenue. JPMorganChase CEO Jamie Dimon warned of an “economic disaster,” stating that the cap could deprive credit from 80 percent of Americans, impacting households and small businesses.
In addition, a 10 percent interest rate cap may jeopardize U.S. credit card rewards programs, affecting perks offered to consumers. Calgary-based Rewards Canada founder Patrick Sojka highlighted that these programs are often sustained by interest income and suggested that companies might adjust rewards structures due to potential revenue reductions.
Trump’s push for the interest rate cap aligns him with unlikely allies from the progressive wing of the Democratic Party, including Sen. Elizabeth Warren and Sen. Bernie Sanders. Warren revealed that Trump contacted her to discuss the cap, a policy she has long advocated for. Sanders and Republican Sen. Josh Hawley previously introduced a bill to limit credit card APR to 10 percent for five years, denouncing high-interest rates charged by financial institutions as exploitative.
While some Republicans support the cap, others, like U.S. House Speaker Mike Johnson, have urged caution, emphasizing the need to consider potential negative effects. The debate surrounding Trump’s proposal reflects a broader discussion on balancing consumer protection with economic implications.