Trump Pushes for a 1-Year, 10% Cap on Credit Card Interest Rates — and Banks Push Back

In a move that has reignited debate over consumer protection and financial regulation, former U.S. President Donald Trump has floated a proposal to cap credit card interest rates at 10% for one year. The idea is simple on its surface: provide immediate relief to millions of Americans struggling under high-interest debt. But the reaction from banks and financial institutions has been swift and hostile, revealing deep divisions over how the U.S. credit system should function.
At a time when credit card interest rates in the United States routinely exceed 20% and, in some cases, climb above 30%, Trump’s proposal strikes a populist chord. Yet critics argue that such a cap could disrupt lending markets, reduce credit availability, and create unintended economic consequences.
So why is Trump pushing this plan, why are banks balking, and what could it mean for consumers?
Why Credit Card Interest Rates Are Under the Spotlight
Over the past few years, American households have increasingly relied on credit cards to cope with inflation, rising rent, and higher everyday expenses. As the Federal Reserve raised benchmark interest rates to fight inflation, credit card APRs surged alongside them.
For many consumers, this has meant:
Growing balances that are harder to pay down
Monthly interest charges that exceed minimum payments
A cycle of debt that feels nearly impossible to escape
Against this backdrop, Trump’s proposal taps into widespread frustration. By capping interest rates at 10% for a limited, one-year period, the plan aims to give borrowers breathing room and slow the growth of household debt.
The Political Strategy Behind the Proposal
Trump has long positioned himself as a champion of “forgotten” or financially stressed Americans. This proposal fits neatly into that narrative, allowing him to argue that he is standing up to powerful banks on behalf of everyday consumers.
Politically, the idea is strategic:
It appeals to working-class voters burdened by debt
It contrasts sharply with what many see as Wall Street-friendly policies
It reframes economic debate around fairness rather than market efficiency
Even though the proposal is temporary, its symbolism is powerful. A one-year cap suggests urgency without committing to a permanent overhaul of the credit system, making it easier to sell to voters while still appearing bold.
Why Banks Are Pushing Back Hard
Financial institutions wasted no time expressing concern. From their perspective, a 10% cap—especially one imposed quickly—poses serious risks.
Banks’ main arguments include:
1. Reduced profitability
Credit cards are one of the most profitable products for banks. Interest revenue helps offset defaults, fraud, and operational costs. A sharp cap would significantly reduce margins.
2. Higher risk, lower reward
Banks argue that high interest rates compensate for lending to higher-risk borrowers. If rates are capped, they may simply stop offering credit to those consumers.
3. Less access to credit
Rather than lowering rates, banks could tighten approval standards, leaving many Americans—especially those with lower credit scores—without access to credit at all.
4. Market interference concerns
The banking industry maintains that interest rates should reflect market conditions, not political decisions. They warn that government-imposed caps distort lending behavior.
In short, banks claim the proposal could hurt the very people it intends to help.
Would Consumers Actually Benefit?
For consumers carrying balances, the immediate benefits are obvious. A 10% cap could:
Dramatically reduce monthly interest charges
Help borrowers pay down principal faster
Prevent balances from ballooning
However, the longer-term impact is less clear. If banks respond by:
Cutting credit limits
Closing accounts
Rejecting new applicants
Then access to short-term credit could become more limited, particularly for lower-income households.
Still, supporters argue that the current system already fails many consumers. With interest rates exceeding 25%, critics say the credit card market borders on exploitative, especially when borrowers are already financially vulnerable.
How This Fits Into the Broader Economic Debate
Trump’s proposal revives a long-standing debate in U.S. politics: Should there be a legal limit on how much lenders can charge?
Historically, usury laws capped interest rates at the state level. Over time, deregulation and federal preemption weakened those limits, allowing banks to charge far higher rates nationwide.
The proposal also intersects with broader questions about:
Corporate responsibility
Income inequality
The role of government in regulating financial markets
Supporters see the cap as overdue consumer protection. Opponents see it as economic overreach with potentially destabilizing effects.
Is the Proposal Likely to Become Law?
Realistically, the chances of this policy being enacted in its current form are slim—at least in the short term. Implementing a nationwide cap would require congressional support and face intense lobbying from the financial industry.
However, even if it never becomes law, the proposal serves another purpose: shifting the conversation. By putting credit card interest rates front and center, Trump has forced policymakers, banks, and the public to confront an issue that often receives little attention.
In that sense, the plan may already be achieving one of its goals.
What Happens Next?
As banks continue to push back and economists debate the consequences, consumers are watching closely. Whether through legislation or public pressure, calls for relief from high credit card interest rates are unlikely to fade.
Trump’s proposal may be temporary, controversial, and politically charged—but it highlights a reality many Americans live with every day: debt is expensive, and the system often feels stacked against borrowers.
Even if the 10% cap never materializes, the question remains: how long can sky-high interest rates persist before meaningful reform becomes unavoidable?