Trump Calls on Congress to Cap Credit Card Rates at 10% — Consumer Relief or Economic Risk?

U.S. President Donald Trump has renewed his push for a temporary cap on credit card interest rates, urging Congress to adopt legislation that would limit the annual percentage rate (APR) charged by credit card issuers to 10% for one year. The proposal — aimed at curbing what the administration calls “excessive” interest charges and easing the financial burden on American households — has ignited sharp debate across politics, finance and consumer advocacy communities.

Trump’s call for a cap came during a speech at the World Economic Forum in Davos, Switzerland, where he framed the plan as part of a broader effort to address cost-of-living pressures and expand economic opportunities for middle- and lower-income Americans.

What Trump Is Proposing

Under the plan:

• Credit card interest rates would be legally capped at 10% APR for a one-year period.
• The cap would apply to most consumer credit cards, potentially covering millions of accounts.
• The administration has asked Congress to enact the legislation, because there is no existing law that gives the president unilateral authority to impose such a cap on private-sector credit card companies.

Trump’s statement reflected growing concerns about credit card debt, which has climbed to record levels in recent years alongside persistently high interest rates. Many consumers currently pay average APRs close to 20–24%, with subprime borrowers facing rates of 30% or more — figures that the president and his supporters argue are unsustainably high.

In his remarks, Trump said he wants the cap to become effective starting January 20, 2026 and said credit card companies “have to give people a break” from what he described as unfair charges. However, he did not outline a specific legal mechanism or enforcement strategy.

Lack of Legal Authority Without Congress

Legal experts note that Trump’s proposal remains aspirational without legislative approval, as the U.S. president does not currently possess statutory authority to unilaterally impose an interest rate cap on private lenders. Executive orders cannot directly dictate pricing for private-sector credit products, and federal regulators such as the Consumer Financial Protection Bureau (CFPB) would need clear statutory powers to enforce such a restriction.

As a result, the White House is seeking support from lawmakers to pass a law that would give effect to the 10% cap. While some bipartisan lawmakers — including progressive Democrats like Sen. Elizabeth Warren and Republicans like Sen. Josh Hawley — have previously expressed support for interest rate limits, the overall legislative prospects are uncertain.

Industry Reaction: Strong Pushback

Major bank executives and industry groups have voiced strong opposition to the plan, warning it could have unintended consequences for credit markets and the broader economy.

Banking Leaders Warn of ‘Economic Disaster’

Jamie Dimon, CEO of JPMorgan Chase, called the proposal an “economic disaster” in comments at the World Economic Forum, arguing that a 10% interest cap would make unsecured lending — such as credit cards — unprofitable for banks and could cut off credit access for millions of Americans who rely on cards for financial flexibility.

Dimon said such a cap would fundamentally change how banks price risk, potentially leading to dramatically reduced credit availability or higher fees elsewhere to compensate. Other banking leaders have echoed concerns that limiting interest rates without addressing underlying costs could undermine the viability of consumer lending.

Industry Associations Voice Opposition

Several major financial associations — including the American Bankers Association, Bank Policy Institute, and Consumer Bankers Association — issued joint statements arguing that a 10% cap would reduce credit availability and push consumers toward higher-cost alternatives like payday loans or “buy now, pay later” products.

Citigroup’s CEO Jane Fraser also expressed skepticism about congressional support for the measure, noting that the broader banking sector believes the cap could harm access to credit for households and dampen consumer spending, which accounts for a large share of the U.S. economy.

Potential Benefits for Consumers

Supporters of the proposal, including some consumer advocacy groups and analysts, argue that a temporary cap would provide meaningful relief for households carrying credit card debt, especially those struggling with high monthly payments on revolving balances.

Economists at Vanderbilt University have estimated that a 10% cap could save American consumers up to $100 billion per year in interest payments. For a cardholder with a $5,000 balance, interest charges under the cap could be roughly $42 per month — compared with about $100 per month at current average rates.

Proponents also argue that lower interest rates could help improve affordability for major life expenses like home purchases, reducing financial strain for families already coping with inflation and high costs of living.

Concerns Around Credit Access and Market Effects

Critics of the rate cap warn that while lower interest rates sound appealing, the real-world effects could be more complex:

Reduced Credit for Higher-Risk Borrowers

Banks argue that without the ability to price risk through higher interest rates, they might respond by tightening credit standards, lowering credit limits, or declining service to higher-risk consumers. This could disproportionately affect lower-income individuals and those with less established credit histories.

Fees and Alternate Pricing Structures

Issuers might also restructure products, increasing annual fees or other charges to offset lost interest income. Some analysts believe that without interest revenue, credit card companies could pivot toward higher fees or reduce rewards and perks — changes that could offset any benefit from lower APRs.

Broader Economic Impact

Opponents argue a cap could reduce consumer access to spending credit, potentially slowing consumer demand — a key driver of the U.S. economy. The net effect could include reduced spending at retailers, restaurants and service sectors that depend on credit-enabled consumer activity.

Political Dynamics and Legislative Hurdles

The credit card rate cap proposal has drawn unusual cross-party discussion. While some progressive Democrats have long championed caps on interest rates as consumer protection, many Republican lawmakers — including leadership in Congress — have been lukewarm or openly skeptical of the idea.

Passing a bill through both chambers by the looming deadline would require navigating significant political and ideological differences over financial regulation, market intervention, and the balance between consumer protection and industry health.

Even if a bill were passed, legal challenges could follow, as questions remain about the federal government’s authority to cap private sector interest rates broadly without clear statutory delegation.

Market Reactions

The proposal has already impacted financial markets. Shares of major credit card issuers — including Capital One, Synchrony Financial, American Express and Citigroup — declined following the announcement, reflecting investor concern about the impact on profitability and lending business models.

Conclusion: A High-Profile Debate on Consumer Finance

President Trump’s call for Congress to cap credit card interest rates at 10% has elevated a longstanding consumer finance issue into the national spotlight. Supporters argue such a move could provide much-needed relief from high borrowing costs, while critics warn of credit contraction and broader economic disruptions.

As the political debate unfolds and lawmakers consider whether to take up the proposal, the clash highlights the complex trade-offs inherent in financial regulation — balancing affordability and access against market viability and risk management. With congressional elections approaching, the issue is likely to remain a contentious part of U.S. policy discussions.