What Trump credit card interest rate cap proposal means for your money
U.S. President Donald Trump meets with oil executives in the East Room of the White House in Washington, DC, USA, on Friday, January 9, 2026.
Bonnie Cash | Bloomberg | Getty Images
President Donald Trump’s call for a temporary 10 percent cap on credit card interest rates, if implemented, could have far-reaching effects on borrowers, both positive and negative.
“Effective January 20, 2026, I, the President of the United States, am calling for a one-year cap on Credit Card Interest Rates of 10%,” Trump wrote on Truth Social on Friday.
The president did not elaborate on how his plan would come to fruition or how he plans for credit card issuers to comply with it. It is also unclear whether Trump’s proposal will apply to new balances or existing balances.
A White House official told CNBC that additional details about the president’s proposal are coming soon.
‘It is truly a great opportunity for credit card holders’
“Credit card rate caps are extremely popular with Americans,” said Matt Schulz, chief credit analyst at LendingTree. “That’s why in recent years we’ve seen big names on both sides of the aisle propose caps on credit card interest rates, including President Trump, who floated the idea on the campaign trail in 2024.”
Approximately 175 million consumers currently have a credit card. While some pay off the balance each month, about 60% of credit card users have revolving debt, according to the Federal Reserve Bank of New York. This means they pay interest fees on the balances they carry from month to month.
Approximately 61 percent of cardholders with a credit card balance have been in debt for at least a year. This rate was 53 percent in late 2024. a new Bankrate survey.
The average credit card interest rate in the US fell to 23.79% in January, reaching its lowest level since March 2023 and continuing its decline for several months. According to LendingTree.
If there were an interest rate cap, “there’s no question it would be a really big deal for credit card holders,” Schulz said.
For example, if you put $250 per month toward the average credit card balance of $7,000 with an annual percentage rate of 23.79 percent, as Schulz calculated, it would take 41 months to pay off your debt and cost more than $3,314 in interest during that time. The same payments at a 10 percent interest rate could pay off the debt in 32 months and cost only $1,004 in interest.
Banks may block access to credit
Still, other experts say such a proposal would be difficult to implement. Ted Rossman, Bankrate’s senior industry analyst, said the interest rate cap is “something the financial industry is going to fight hard.”
Even as the Federal Reserve cuts its benchmark interest rate, average credit card APR rises It has barely moved, in part because credit card issuers are mitigating their exposure to borrowers who might default on payments or default.
“This would deal a major blow to banks, credit card issuers and payment networks,” according to Rossman.
Banking experts told CNBC that the cap would result in issuers restricting access to consumers with poor credit and direct borrowers to less regulated or more costly alternatives, such as buy now pay later and payday loans.
“Evidence shows that a 10 percent interest rate cap would reduce credit availability and be devastating for millions of American families and small business owners,” the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum and Independent Community Bankers of America said in a joint statement. he said.
WalletHub CEO Odysseas Papadimitriou said a 10 percent cap “will be beneficial in the short term” for consumers carrying debt. “But once they pay off their debt, they won’t be able to get any more loans.”
Impacts may include higher fees and fewer rewards
Anna Barclay | Getty Images
Banks make money from credit cards in three ways: Transaction fees charged to merchants, fees charged to consumers, and interest charged on carried balances, known as “shift fees.”
“Even with a 10 percent cap, credit cards would remain among the most profitable businesses in banking, generating more than $150 billion annually in fees and billions more in fees, all before tens of billions more in interest that would remain under the cap,” said Adam Rust, director of financial services for the Consumer Federation of America.
Experts say banks may add or increase fees and change repayment structures to make up for any loss in interest income. They may also be interested in rewards programs.
Under Trump’s proposal, “I foresee sharp cuts in access to credit and reward programs,” Rossman said. “This would completely disrupt the credit card market as we know it.”
Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, a political economy research center at Vanderbilt University, told CNBC that the potential impact on awards is a “very exaggerated downside.”
Industry profit margins are significant enough that capping interest rates at 18 percent or 15 percent “would save Americans $16 billion and $48 billion, respectively, with no impact on rewards or lending volumes.” September analysis by Shearer.
The analysis found that a 10 percent cap would save Americans $100 billion in interest, but could also trigger a $27 billion reduction in credit card rewards affecting borrowers with credit scores of 760 or lower. Even so, the interest saved far outweighs that loss, Shearer said: “The reduced rewards pale in comparison to the interest savings those same people will receive.”
A. 2024 LendingTree survey It found that most Americans still support the cap even though it would restrict credit and reduce rewards.
Steps to help secure a lower rate
While consumers shouldn’t count on a 10% cap on card rates this month (or at all), there are steps to take now to qualify for lower rates.
Cardholders who pay their balance on time and in full and maintain their utilization ratio (or the ratio of debt to total credit) Having less than 30% of their current credit can increase their credit score. Better credit paves the way for lower-cost loans and better terms going forward.
“Improving your credit score will put you in a lower risk basket so at 10% banks can still make money,” Papadimitriou said.
LendingTree’s surveys show that people with good credit who ask a lender for a lower rate often get that rate.
“You don’t have to wait for the rate cap to lower your card’s interest rates,” Schulz said. “A 0% balance transfer credit card can help you avoid interest altogether, often for more than a year, and is probably your best tool against card debt.”
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