President Donald Trump’s proposal to impose a one-year 10% cap on credit card interest rates has sparked significant debate amid growing concerns about affordability for American consumers. While the initiative could offer temporary relief, critics argue it may not effectively tackle the underlying issues surrounding affordability.
Supporters of the cap believe it could save consumers billions. Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, noted that it could provide substantial financial relief for Americans burdened by high credit card costs. Shearer’s research indicates a 10% rate cap could lead to annual savings of around $100 billion for consumers, highlighting that although some rewards might be reduced, the interest savings could outweigh those losses.
However, major financial institutions such as Citigroup and Bank of America have expressed their opposition to the proposed cap, warning that it could result in restricted access to credit. Mark Mason, Citigroup’s CFO, commented, “An interest rate cap would restrict access to credit to those who need it the most and, frankly, would have a deleterious impact on the economy.” Brian Moynihan, CEO of Bank of America, echoed these concerns, suggesting that lowering caps would lead to less availability of credit and indicated that banks are committed to balancing affordability and access.
The current average interest rate on credit cards stands at 19.64%, and rising credit card debt is a pressing issue, with Americans holding $1.23 trillion in outstanding balances as of the third quarter of 2025, marking a record high since 1999. Populist lawmakers from various political backgrounds have previously pushed for similar caps on credit card interest rates, indicating a recurring theme in legislative discussions.
Trump’s push for the rate cap is part of his campaign platform as the midterm elections approach. However, skepticism remains about how effectively he can implement this proposal since it would require legislative backing and cooperation from card issuers. Critics, including former Republican senator Pat Toomey, suggest the cap might serve as a politically motivated gesture rather than a viable solution to the affordability crisis.
Financial experts suggest that instead of imposing a rate cap, lawmakers should shift focus towards more comprehensive reforms, like capping late fees, to address the broader issues within the credit card industry. Rahit Chopra, a former director of the Consumer Financial Protection Bureau, points out that real reform is essential but doubts the administration’s commitment to follow through.
In conclusion, while there is potential for the 10% cap to provide immediate relief for consumers facing steep credit card rates, its broader implications could lead to unintended consequences that may adversely affect access to credit. The debate continues, with mounting pressure on financial institutions to find a balance between profitability and consumer protection.