It started with a Truth Social post, as things often do. On January 9, 2026, President Trump threw a massive wrench into the gears of the American financial system by calling for a temporary 10% cap on credit card interest rates.
Think about that for a second.
Right now, the average credit card APR is hovering somewhere between 20% and 30%. For millions of people, that’s a mountain of debt that never stops growing. Trump basically said, "Enough is enough," arguing that the American public is being "ripped off." He wants this cap to kick in on January 20—the one-year anniversary of his second inauguration.
But it’s not just about credit cards. This is part of a much bigger, much louder fight. President Trump calls for lower interest rates almost constantly, and his target isn't just the banks—it’s the Federal Reserve.
The War on the Fed: Why Trump Wants Rates at 1%
The Federal Reserve, led by Jerome Powell, is supposed to be independent. It’s the "referee" of the economy. They set the federal funds rate, which currently sits around 3.64%. Trump? He thinks that’s way too high.
In late 2025, Trump told the Wall Street Journal he wants interest rates at "1% or maybe lower than that" by the end of 2026. Why such a drastic drop?
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- National Debt Costs: The U.S. debt is over $34 trillion. When rates are high, the government has to pay billions more just in interest.
- Economic "Juice": Low rates make it cheaper to buy houses, expand businesses, and spend money.
- Political Optics: Low rates usually mean a booming stock market and happy voters.
Honestly, it’s been a mess. The Department of Justice (DOJ) recently launched a criminal investigation into Jerome Powell regarding the costs of renovating the Fed’s headquarters. Powell didn't hold back, calling the investigation "politically motivated" and a direct result of the Fed refusing to slash rates as fast as the White House wants.
The 10% Credit Card Cap: Hero Move or Economic Disaster?
If you’re carrying a balance on a Chase or Citi card, a 10% cap sounds like a dream. But Wall Street is panicking.
JPMorgan Chase’s CFO, Jeremy Barnum, basically warned that if this happens, banks will just stop giving out credit. If a bank can only charge 10% interest but the risk of a person defaulting is high, they won't issue the card. Experts at Vanderbilt University suggest this could save consumers $100 billion a year, but the Electronic Payments Coalition says it would lead to 80% of people with credit scores under 740 losing their accounts.
It’s a classic "price control" dilemma. You lower the price (the interest), but you might also kill the supply.
How This Hits Your Daily Life
Most people don't care about "basis points" or "liquidity." They care about their mortgage and their monthly bills.
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Since President Trump calls for lower interest rates so frequently, the market is in a weird limbo. Usually, when a President yells at the Fed, investors get nervous. If people think the Fed has lost its independence, they might demand higher yields on government bonds to compensate for the risk of inflation.
Paradoxically, Trump's demands for lower rates could actually drive them up if the market loses trust.
What you might see in the coming months:
- Mortgages: If the Fed actually buckles and cuts rates to 2% or 1%, mortgage rates could tumble back toward the 4% range.
- Savings Accounts: Your HYSA (High-Yield Savings Account) would likely see its interest rate tank. Say goodbye to that 4.5% APY.
- Inflation: This is the big scary one. If you cut rates too fast while the economy is still warm, prices for milk, gas, and eggs could start climbing again.
Is It Even Legal?
Here’s the thing: The President doesn't have a "lower rates" button on his desk.
To cap credit card rates, he’d likely need Congress to pass something like the Credit Card Competition Act of 2026. While he’s reportedly talked to Senator Elizabeth Warren about it—which is a wild pairing if you think about it—getting a Republican-led House and a split Senate to agree on a 10% cap is a tall order.
As for the Fed, Trump can’t just fire Powell because he’s unhappy. The law says a Fed Chair can only be removed "for cause," which usually means some kind of legal or ethical misconduct. That’s why many see the DOJ’s investigation as a move to create that "cause."
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What You Should Do Now
Don't wait for a 10% cap to save you. It might never happen.
1. Refinance early, but carefully. If you see a dip in mortgage rates because of this political pressure, be ready to jump, but watch the closing costs.
2. Pay down high-interest debt now. Even if a cap is coming, it’s "temporary" (likely one year). The best interest rate is 0%, which you get by not carrying a balance.
3. Watch the "Bond Vigilantes." Keep an eye on the 10-year Treasury yield. If it starts spiking despite Trump’s calls for lower rates, it means the market is scared of inflation. That’s a sign to move into "defensive" investments like gold or inflation-protected securities (TIPS).
The bottom line? This is a high-stakes game of chicken between the White House and the world's most powerful central bank. Whether it results in cheaper loans or a spike in inflation depends entirely on who blinks first.
Stay liquid. Keep your credit score high. And don't assume the 25% APR on your credit card is going away by Valentine's Day.
Next Steps for Your Finances:
- Check your current credit card APRs and call your bank to request a lower rate; many will negotiate if you have a good payment history.
- Monitor the 10-year Treasury yield (available on most finance apps) as a leading indicator of where mortgage rates are headed.
- Review your savings strategy—if rates do drop to 1%, you'll want to move cash from "high-yield" accounts into other assets like CDs or bonds before the yields disappear.