President Donald Trump wants to make it more affordable for Americans to go into debt. The president says banks should cap credit card interest at 10% for a year — an idea that elicits some applause from borrowers and a lot of consternation from finance companies.
Trump’s proposed cap could “save Americans billions of dollars,” said Axios, but banks “warn of consumers losing access to credit.” The idea has drawn support from progressives like Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) but also conservatives like Sen. Josh Hawley (R-Mo.). Banking lobbyists have “freaked out,” however. The proposal emerges as card rates have jumped to “record levels,” hitting highs of 21% during the last quarter of 2025. Banks say an interest rate cap will result in less credit and the demise of rewards programs. That would “drive consumers toward less regulated, more costly alternatives,” said the Consumer Bankers Association.
Industry groups say the cap would spark a “severe pullback in lending” because it would make credit cards unprofitable, said Reuters. The Electronic Payments Coalition said more than 80% of credit card accounts would be “closed or severely restricted.” But credit card profit margins “are absolutely massive,” said Brian Shearer of the Vanderbilt Policy Accelerator. “There really is some fat to cut."
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Credit companies have “behaved as loan sharks,” said Cheryl K. Chumley at The Washington Times. In the recent past, cards “capped at around 12%,” but that was before banks started “soliciting college students as customers” before they started earning real money. As a result, Americans are “ensnared” in debt and the “only clear winners have been the banks.” A cap would force lenders to tighten lending standards and only issue cards to people who can afford the payments. “The truth is some people just shouldn’t have credit cards.”
There is a reason credit cards “carry high rates when granted to risky debtors,” said Charles C.W. Cooke at the National Review. Interest rates are “inextricably tied” to the risk of lending money to people less able to afford debt payments. A cap would mean fewer Americans would be able to get credit cards and customers “who exhibited even a modest pattern of delinquency would have their accounts canceled on the spot.” That might produce the populist affordability backlash that Trump is trying to avoid, from angry Americans suddenly unable to get credit. “It is difficult to overstate how badly this idea would backfire.”
What next?
The financial industry is girding to fight Trump’s proposal, said CNBC. “We owe that to shareholders,” said JPMorgan Chase CFO Jeremy Barnum. Otherwise JP Morgan and other banks will be forced to “reduce the supply of credit,” he said, which would be bad for the “wider economy.”
Senate Majority Leader John Thune (R-S.D.) and House Speaker Mike Johnson (R-La.) have both “voiced skepticism” about Trump’s idea, said Politico. A bill to cap interest rates is “not something I’m out there advocating for,” said Thune. But a floor vote on the proposal is probably coming at “some point.”
