We earn commissions from brands listed on this site, which influences how listings are presented.

What Trump's Interest Cap Can Mean For Your Credit Card Debt

President Donald Trump has recently reignited a contentious debate in American finance with his proposal to cap credit card interest rates at 10%.

This site is a free online resource that strives to offer helpful content and comparison features to our visitors. We accept advertising compensation from companies that appear on the site, which may impact the location and order in which brands (and/or their products) are presented, and may also impact the score that is assigned to it. Company listings on this page DO NOT imply endorsement. We do not feature all providers on the market. Except as expressly set forth in our Terms of Use, all representations and warranties regarding the information presented on this page are disclaimed. The information, including pricing, which appears on this site is subject to change at any time. 

What Trump's Interest Cap Can Mean For Your Credit Card Debt
Meagan Drew Bio
Meagan Drew
Jan. 26, 20253 min read
This announcement comes amid soaring credit card debt, which has reached approximately $1.166 trillion, and average interest rates that exceed 20%.

As many Americans grapple with the burden of high-interest payments, this proposal could have profound implications, potentially reshaping the consumer credit landscape. 

» Consumers should always remain vigilant and consider their options when managing credit—whether through traditional means or by exploring our best debt consolidation plans.

The Proposal and Its Context

Trump’s proposal, made during a rally in September 2024, aims to provide immediate relief to working Americans struggling with escalating debt. Trump indicated that his administration intends to establish a temporary cap on credit card interest rates to help working Americans who struggle to manage their financial burdens.

This sentiment resonates with many consumers who face monthly interest payments exceeding $100 on average balances of $6,500. Under Trump's plan, those payments could drop significantly, allowing borrowers to pay off their debts more efficiently. However, the proposal is not without its critics. 

Financial analysts warn that while a cap could alleviate immediate financial pressure for many consumers, it may also lead to unintended consequences that could hinder access to credit in the long run.


Potential Benefits of Trump's Credit Cap

One of the most significant advantages of capping interest rates at 10% would be the reduction in interest payments for cardholders

For instance, a consumer with a $6,500 balance at an interest rate of 21.5% currently pays about $116 monthly in interest. If the rate were capped at 10%, that payment would drop to approximately $54—a substantial saving that could help many families manage their finances more effectively.

Moreover, lower interest rates could facilitate faster debt repayment. With reduced monthly payments, borrowers would have more flexibility to allocate funds toward principal repayment rather than interest charges. This shift could lead to quicker financial recovery for those burdened by high credit card debt.

Possible Drawbacks of Trump's Credit Cap

Despite these potential benefits, there are significant drawbacks to consider. One major concern is that banks may tighten lending criteria in response to a mandated cap on interest rates. 

Financial institutions typically rely on higher interest rates to offset the risks associated with lending to higher-risk individuals. If they can only charge 10%, they may become more selective about whom they lend to, potentially leaving many consumers without access to credit.

Additionally, banks might eliminate rewards and perks associated with credit cards as they adjust their business models to accommodate lower profit margins. Many consumers enjoy benefits such as cashback or travel rewards; however, these perks could be sacrificed to maintain profitability.

Furthermore, if access to traditional credit becomes more restricted due to tighter lending practices, some consumers might turn to alternative forms of borrowing, such as payday loans. These options often come with exorbitant fees and can trap borrowers in a cycle of debt that is even harder to escape.


Economic Impact of Trump's Proposed Interest Caps


The broader economic implications of this proposal are also worth examining.

Financial analysts predict that capping credit card interest rates could significantly disrupt the market. The American Bankers Association has already expressed concerns about how such a policy might affect lending practices and overall market stability.

Moreover, this proposal raises inflation concerns. Lower interest rates on credit cards could potentially increase consumer spending, and some economists worry about the impact on inflation, especially if this policy is implemented alongside other economic measures aimed at stimulating growth.

The Current Political Landscape

Interestingly, Trump's proposal has received attention from opposing political parties. Senator Bernie Sanders has publicly endorsed the idea and plans to introduce legislation supporting it. This rare moment of agreement between political opposites highlights the widespread recognition of the challenges of high-interest credit card debt.

However, passing such legislation may prove challenging. The political landscape is fraught with obstacles as legislators navigate competing interests from both consumer advocates and financial institutions. The potential for legal challenges also looms large; banks may resist changes that fundamentally alter their business models.

Frequently Asked Questions

How would a 10% interest rate cap impact the availability of credit cards?

A cap on interest rates may lead banks to tighten their lending criteria significantly. With reduced profit margins from lower rates, financial institutions might become more selective in approving credit card applications, particularly for higher-risk borrowers. This could result in fewer people being able to get credit cards or access lines of credit altogether.

What are the potential hidden costs of Trump's proposed interest cap?

While capping interest rates may seem beneficial initially, hidden costs could arise. For instance, banks might increase penalty fees or reduce other benefits by adjusting their business models to maintain profitability. These changes could offset some savings consumers expect from lower interest rates.

Could Trump's proposal lead to increased penalty fees for consumers?

Yes, it’s possible that as banks adapt to lower allowable interest rates, they might compensate by increasing penalty fees for late payments or other infractions. This shift would place additional financial burdens on consumers who may already be struggling with debt.

Bottom Line: What Could Trump's Credit Cap Proposal Mean For Americans? 

As discussions around Trump’s proposed cap on credit card interest rates unfold, consumers must weigh the potential benefits and drawbacks carefully. While capping rates at 10% could provide immediate relief for those grappling with high-interest debt, it’s crucial to consider the broader implications for access to credit and potential shifts within the financial industry.

Understanding how these policies might affect personal finances is vital for making informed decisions about borrowing and spending habits in the future. 

Meagan Drew Bio
Written byMeagan Drew

Meagan is a former financial advisor who spent seven years focused on client financial literacy. She writes for BestMoney.com, Investopedia, Apple News+, and SimpleMoneylyfe.com, specializing in making complex topics like investing, insurance, and budgeting accessible and engaging.

View Rates