Trump unveils 01 year cap on credit card interest rates, sparking backlash from banks and lawmakers
Donald Trump has announced plans to impose a one year cap limiting credit card interest rates to 10 percent, a move that immediately triggered mixed reactions from Congress, the banking industry and even some of his own allies.
In a post on Truth Social late Friday, the president said the cap would take effect on 20 January. He did not explain how the measure would be enforced or whether it would require congressional approval.
“We will no longer let the American public be ripped off by credit card companies charging interest rates of 20 to 30 percent and even more,” Trump wrote, blaming the rise in borrowing costs on the previous administration. He added that the date would coincide with the anniversary of what he described as a historic and successful Trump administration.
Campaign promise revived
Trump pledged during his second presidential campaign to cap credit card rates as household debt surged to record levels. Credit card balances rose from about $770bn in early 2021 to $1.17tn by the third quarter of 2024, later climbing further to roughly $1.23tn, according to data from the New York Federal Reserve.
After months without action, senators Bernie Sanders and Josh Hawley introduced a bipartisan bill in February 2025 proposing a five year cap at 10 percent. The legislation stalled amid fierce opposition from banking groups.
“When large financial institutions charge over 25 percent interest, they are not providing credit, they are engaged in extortion,” Sanders and Hawley said at the time, arguing that working families needed urgent relief.
Just hours before Trump’s announcement, Sanders criticised the president for failing to deliver on his pledge. “Trump promised to cap credit card interest rates at 10 percent,” he wrote on X. “Instead, he deregulated big banks.”
Industry alarm and political doubts
The announcement quickly drew criticism from Wall Street. Billionaire hedge fund manager Bill Ackman, a Trump supporter, warned that a strict cap could backfire. He said lenders might cancel millions of cards if they could not price risk properly, particularly for subprime borrowers.
“My concern is that millions of Americans would lose access to credit,” Ackman said, arguing that banks need flexibility to cover losses.
Senator Elizabeth Warren also questioned whether Trump could act alone. She said any serious cap would require legislation and accused the president of undermining regulators such as the Consumer Financial Protection Bureau.
“Begging credit card companies to play nice is a joke,” Warren said. “If Trump were serious, he would work with Congress.”
Banks warn of reduced credit
Major banking organisations, including the American Bankers Association and the Bank Policy Institute, issued a joint statement opposing the proposal. They said a 10 percent cap would sharply reduce access to credit for families and small businesses and could push borrowers toward higher cost alternatives such as payday loans.
Read More: Martin Lewis Warns of 30% Fraud Surge for Lloyds, Barclays & NatWest Card Users
Industry groups argue that banks would respond to a cap by cutting rewards, tightening lending standards and reducing credit lines, particularly for higher risk customers.
Researchers who examined Trump’s campaign pledge previously estimated that a 10 percent cap could save consumers up to $100bn a year in interest payments. They also concluded that while banks would take a hit, the industry would remain profitable, largely because of revenue from merchant fees.
What happens next
Trump did not clarify whether the cap would be imposed through executive action or legislation. Senator Roger Marshall of Kansas said he had spoken with the president and would work on a bill with Trump’s backing.
With bipartisan proposals already circulating in Congress and strong resistance from the financial sector, the fate of the interest rate cap remains uncertain. What is clear is that Trump’s announcement has reignited a fierce debate over affordability, regulation and the future of consumer credit in the United States.
