Trump’s 10% Credit Card Interest Cap: Banks Vow Fight Amid Economic Fears

In a move poised to reshape the American financial landscape, President Donald Trump has declared his intention to impose a temporary 10% cap on credit card interest rates. Announced on January 9, 2026, via his Truth Social platform, the directive, set to take effect on January 20, 2026, for a duration of one year, aims to alleviate the burden on millions of Americans grappling with escalating credit card debt. However, the proposal has immediately ignited a fierce debate, pitting the populist appeal of consumer protection against the stark economic warnings from the banking industry and raising significant questions about presidential authority.

For years, credit card interest rates have been a growing concern for American households. As of November 2025, the average credit card rate stood at a staggering 22.3%, according to the Federal Reserve, a significant jump from the 13.9% average seen a decade prior. This surge has occurred even as the central bank cut its benchmark rates three times last year, bringing them to a range of 3.5% to 3.75%. The disparity has meant that while banks enjoy lower borrowing costs, consumers have seen little relief, with many cards carrying terms well above the average, sometimes reaching 20% to 30% or more.

The impact of these high rates is profound. Nearly half of all US households carried credit card debt in 2022, the most recent survey by the Federal Reserve revealed. For those with a balance, the average debt exceeded $6,000, translating into roughly $100 in monthly interest charges at a 20% rate. This financial strain has often led to a cycle of debt that is difficult for many to escape, fueling the perception that credit card companies are ‘ripping off’ the public.

President Trump’s Bold Directive and Rationale

President Trump’s announcement was unequivocal. Taking to Truth Social, he wrote, “We will no longer let the American public be ‘ripped off’ by credit card companies charging interest rates of 20% to 30%, and even more, which festered unimpeded during the Sleepy Joe Biden Administration.” He reiterated his stance two days later, speaking to reporters on Air Force One, where he described credit card companies as having “really abused the public” and vowed, “I’m not going to let it happen.”

The proposed cap, a revival of a promise made during his 2024 presidential campaign, is intended to offer immediate relief. Trump warned that any credit card companies failing to adhere to the 10% limit would be “in violation of the law.” The timing, set for the anniversary of his second-term inauguration, adds a symbolic layer to the executive action, positioning it as a direct intervention to protect consumers.

Banking Industry Sounds Alarm: A Looming Economic Battle

The financial sector’s response was swift and sharply critical. JPMorgan Chase, a titan in the banking world, indicated that banks are prepared to fight the proposed cap, with a spokesperson stating, “Everything’s on the table.” This sentiment was echoed in a joint statement issued by a consortium of powerful industry groups, including the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America.

While acknowledging a shared goal of “helping Americans access more affordable credit,” these organizations issued a stark warning: “If enacted, this cap would only drive consumers toward less regulated, more costly alternatives.” They argued that such a drastic reduction in interest income would “upend the basic economics of the industry,” as senior equity analyst Matt Britzman of Hargreaves Lansdown noted. Banks, facing reduced profitability, would be forced to make difficult adjustments. The Bank Policy Institute previously warned that a similar cap could lead to two-thirds of cardholders who roll over their balance month-to-month losing access to credit lines or experiencing significant limitations, potentially even seeing minimum payment requirements rise.

The market reacted immediately. Shares of leading US credit card issuers like American Express, Visa, and Mastercard experienced declines, with American Express initially falling by 4% and Visa and Mastercard dropping over 2%. Other major US lenders, including JPMorgan Chase and Bank of America, also saw their shares open more than 1% lower. Even the UK’s Barclays, with its substantial US card business, saw its shares dip, underscoring the global ripple effect of such a significant policy shift.

Political Crosscurrents and Legal Hurdles

Despite the industry’s outcry, the *idea* of a credit card interest cap isn’t entirely new or partisan. Democratic Senator Bernie Sanders and Republican Senator Josh Hawley had previously co-sponsored a bipartisan bill in February 2025, which sought to impose a 10% cap on credit card interest rates for five years. However, that legislation, much like similar proposals in the House, failed to gain traction and “hasn’t gone anywhere,” as WAMU reported.

This legislative inertia highlights a significant hurdle for President Trump’s executive action: its legal enforceability. Analysts and legal experts question whether a president possesses the authority to unilaterally impose such a cap without congressional approval. The banking industry, known for its successful legal challenges against regulations in the past, is widely expected to mount a robust legal defense, potentially leading to protracted court battles.

The proposal also drew fire from other political figures. Senator Sanders, hours before Trump’s Truth Social post, criticized the president on X for not fulfilling a campaign promise to set such a limit, calling it “unacceptable.” Senator Elizabeth Warren (D-Mass.) also weighed in, stating, “Begging credit card companies to play nice is a joke.” She added, “I said a year ago if Trump was serious I’d work to pass a bill to cap rates. Since then, he’s done nothing but try to shut down the CFPB [Consumer Financial Protection Bureau].” This critique points to a broader tension between the administration’s regulatory posture and its current populist appeal.

Notably, the Trump administration had previously moved to reverse a Biden-era regulation capping credit card late fees at $8, a measure intended to curb “junk fees.” This history further complicates the narrative, suggesting a selective approach to consumer protection that aligns with broader political objectives.

The Uncharted Waters Ahead

As the January 20 deadline approaches, the financial world holds its breath. The proposed 10% cap represents a direct challenge to the fundamental business model of credit card companies and banks. While the populist rhetoric aims to resonate with millions of indebted Americans, the practical implications and legal battles ahead are immense. The question remains whether an executive order can fundamentally alter a deeply entrenched financial system without legislative backing, or if it will ultimately founder in the courts, leaving consumers and the industry in a state of prolonged uncertainty.

President Trump’s unilateral move to cap credit card interest rates, while undoubtedly appealing to a beleaguered consumer base, presents a complex dilemma. It attempts to address a genuine financial burden but risks disrupting market stability and credit access without clear legislative authority. The ensuing legal and economic clashes will test the boundaries of executive power and reveal the true cost, or benefit, of such a sweeping intervention.