Trump Proposes One-Year 10% Cap on Credit Card Interest Rates

President Donald Trump has announced a proposal to cap credit card interest rates at 10% for one year, effective January 20, 2026. This initiative seeks to reduce the financial strain on consumers currently facing average interest rates exceeding 20%.

The banking industry has expressed strong opposition to the proposed cap. In a joint statement, several banking associations, including the American Bankers Association and the Consumer Bankers Association, argued that such a cap "would reduce credit availability and be devastating for millions of American families and small business owners who rely on and value their credit cards."

A September 2025 analysis by Vanderbilt University suggests that implementing a 10% cap could save consumers approximately $100 billion annually in interest payments. However, the study also indicates that banks might respond by reducing rewards programs and tightening lending standards, potentially affecting consumers with lower credit scores.

The proposal has garnered mixed reactions from lawmakers. Senator Josh Hawley (R-Mo.) expressed support, stating, "Fantastic idea. Can't wait to vote for this." Conversely, Senator Elizabeth Warren (D-Mass.) criticized the proposal, emphasizing the need for legislative action to enforce such a cap.

The feasibility of implementing the cap remains uncertain, as it would likely require congressional approval. The administration has not yet detailed the mechanisms for enforcing the proposed cap or addressed potential challenges in its implementation.