Honestly, the way most of us talk about credit cards is pretty bleak. You swipe for a grocery run, maybe a car repair, and then—boom. You're looking at a 24% APR that makes the balance feel impossible to kill. That's why the recent noise around trump credit card interest caps has people talking. It sounds like a dream, right? Capping those sky-high rates at 10% would basically cut most people's interest bills in half.
But as with anything in Washington, the gap between a "good idea" and an actual law is huge.
On January 10, 2026, President Trump doubled down on a campaign-style promise, calling for a one-year cap on credit card interest rates to start on January 20. He used some pretty blunt language, saying he wouldn't let the public be "ripped off" by companies charging 20% or 30%. It’s a move that has sent shockwaves through the banking sector. American Express, Visa, and Mastercard stocks all took a hit immediately after.
The 10% Cap: What's Actually on the Table?
The proposal is straightforward: no credit card company could charge more than 10% interest for a full year.
For the average household carrying about $11,000 in debt, this isn't just a small change. At the current average rate of roughly 21% to 25%, you’re throwing away thousands every year just to stand still. Dropping that to 10% would save the average indebted family around $1,100 a year. Across the whole country, researchers at the Vanderbilt Policy Accelerator estimate this could keep $100 billion in people's pockets rather than the banks'.
✨ Don't miss: Rough Tax Return Calculator: How to Estimate Your Refund Without Losing Your Mind
It’s worth noting that Trump isn't the only one pushing this. You’ve got this weird "horseshoe" politics happening where Senator Bernie Sanders and Senator Josh Hawley—two guys who usually can't agree on what day of the week it is—both introduced the "Percent Credit Card Interest Rate Cap Act" back in 2025. They wanted a 10% cap for five years.
Why the Banks are Freaking Out
If you ask a bank executive, they’ll tell you this is a disaster waiting to happen. Jeremy Barnum, the CFO of JPMorgan Chase, was pretty blunt about it recently. The industry argument is basically: "If we can't charge high interest to cover the risk of people not paying us back, we just won't give them credit at all."
Here is what the banking trade groups are warning will happen:
- The Great Cancellation: Banks might close accounts for anyone with a credit score below 700 or 740 because the 10% return doesn't justify the risk.
- Death of the Points: Say goodbye to those 3x travel points or 2% cash back. Those perks are funded by the massive interest revenue the banks pull in.
- Predatory Shifts: If you can't get a card, where do you go? Banks argue you'll end up at a payday lender or a pawn shop where the "interest" is way worse than 30%.
Is It Even Legal?
This is the billion-dollar question. Can a President just... decide what interest rates should be?
🔗 Read more: Replacement Walk In Cooler Doors: What Most People Get Wrong About Efficiency
Probably not.
Most legal experts, including those from the Congressional Research Service, point out that there is no national law currently giving the President the power to set interest rate ceilings by executive order. To make a 10% cap stick, it would almost certainly require an act of Congress. While Trump has mentioned a "mandate," the path likely involves getting a bill through the House and Senate.
Interestingly, there are already precedents for this. The Military Lending Act already caps rates at 36% for active-duty service members. Federal credit unions also have a cap, usually around 18%. So, the idea of a ceiling isn't new—it's the level of the ceiling (10%) that’s the radical part.
The Real-World Risk for "Subprime" Borrowers
There is a real tension here. If you have a credit score of 580, you are "risky" to a bank. Currently, they mitigate that risk by charging you 32% interest. If the law says they can only charge you 10%, the bank's math might say, "It's better to just close this person's account than risk a 10% return on someone who might default."
💡 You might also like: Share Market Today Closed: Why the Benchmarks Slipped and What You Should Do Now
Some analysts at Wolfe Research think a hard cap would lead to a "disproportionate reduction" of credit for the people who need it most. It's a classic catch-22. You want to help people by making debt cheaper, but in doing so, you might make debt unavailable.
Actionable Insights: How to Prep Your Wallet
Whether the trump credit card interest cap becomes law or just stays a talking point, you shouldn't wait for a miracle to manage your debt. Politics moves slow; your interest compounds daily.
- Check Your "Revolving" Status: If you carry a balance, you are a "revolver." These are the people most impacted. If the cap happens, your interest drops. If it doesn't, you need a plan.
- The "Credit Union" Alternative: Remember, credit unions already have lower caps (around 18%) than big banks. If your bank is hitting you with 29%, moving to a credit union is a win regardless of what happens in D.C.
- Monitor Your Credit Score: If a cap is passed, banks will get picky. A score of 700 might be the new "entry level" for a card. Use free tools to keep your score as high as possible so you don't get your account closed in a "purge."
- Ignore the "Executive Order" Hype: Don't stop paying your 25% interest card because you heard a cap is coming "next week." Until you see your statement change, that 25% is real money you owe.
The fight over credit card interest is really a fight over who gets a piece of the pie. Banks want the profit; the government wants the popular win of lower bills. For you, the best move is to pay down balances now while the debate rages on. If the 10% cap actually lands, treat it as a lucky break, not a strategy you bet your future on.