Honestly, if you’ve been watching the news lately, it feels like the vibe between the White House and the Federal Reserve has gone from "tense" to "all-out war." It’s kinda wild. We’re sitting here in early 2026, and President Donald Trump is basically treating the Federal Reserve like a slow-moving contractor he wants to fire.
The big headline everyone is buzzing about right now? Trump wants a 10% cap on credit card interest rates. He’s not being subtle about it, either. In a post on Truth Social just last week, he claimed Americans are being “ripped off” by banks charging 30%. He wants this cap in place by January 20. But here’s the thing—the way he talks about Trump on interest rates is often very different from how the actual machinery of the U.S. economy works.
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The 10% Credit Card Cap: Hero Move or Economic Chaos?
Let’s look at the math for a second. Right now, the average credit card interest rate is hovering way north of 20%. Trump’s plan to slash that to 10% sounds amazing if you’re carrying a balance. Who wouldn't want to pay half the interest? Vanderbilt University researchers actually put a number on it: they say it could save Americans about $100 billion a year. That’s massive.
But there’s a catch. Banks aren't exactly known for being charities.
If you force a bank to cap rates at 10%, they’re going to look at a "risky" borrower—someone with a credit score under 670—and say, "No thanks." Why would they lend money at 10% to someone who might not pay it back when the risk is worth way more than that?
The Electronic Payments Coalition is already sounding the alarm, saying this could lead to millions of accounts being closed. Basically, the people Trump says he’s trying to help might end up with no credit at all. It’s a classic case of good intentions meeting the brick wall of banking reality.
The War with Jerome Powell
Then there’s the Federal Reserve. Trump’s relationship with Fed Chair Jerome Powell is, well, messy. He recently called Powell a "lousy Fed chairman" and even hinted that "that jerk will be gone soon."
But it’s not just talk anymore. The Department of Justice is actually investigating Powell over some renovations at the Fed’s headquarters. Powell says it’s a total "pretext"—a fake excuse to weaken the Fed’s independence so Trump can force interest rates down.
Why does Trump want lower rates so badly?
It’s not just about your mortgage or my car loan. It’s about the national debt.
- The U.S. is paying roughly $1 trillion a year just in interest on what it owes.
- If the Fed drops rates by even 1%, the government saves billions.
- Trump has gone on record saying he wants the benchmark rate at "1% or lower."
The Fed, however, is staying stubborn. They’re looking at inflation—which is still sticky—and saying "not yet." This creates a weird tug-of-war. If Trump successfully bullies the Fed into cutting rates while inflation is still high, we could see prices for groceries and gas start climbing again. It's a dangerous game.
The "Shadow" Fed and 2026 Midterms
We have to remember the context here. We’re heading into the 2026 midterm elections. Affordability is the only thing voters care about right now. Trump knows this. By attacking "greedy" credit card companies and a "slow" Fed, he’s framing himself as the guy fighting for your wallet.
There’s also talk about a "shadow" Fed chair—someone the administration might appoint to basically signal what the "real" policy should be before Powell’s term even ends in May. It’s unprecedented. Usually, the Fed is like a quiet library where people whisper about basis points. Now, it’s a boxing ring.
What This Actually Means for Your Wallet
So, what should you actually do? If you're waiting for Trump on interest rates to suddenly make houses or cars cheap again, don't hold your breath.
- Credit Cards: If you have a high-interest card, don't wait for a 10% cap that might never happen (or might get your card canceled). Try a balance transfer now while those offers still exist.
- Mortgages: Rates have dipped a bit since late 2025, but the volatility is high. If you see a rate you can live with, take it. Waiting for 3% rates again might be a very long wait.
- Savings: High-yield savings accounts are still paying out well because the Fed hasn't made those big cuts Trump wants. Enjoy that 4-5% while it lasts.
The reality is that while the President has a "bully pulpit," he doesn't have a "interest rate dial" on his desk. He can pressure, he can tweet, and he can investigate, but the market usually has the final say.
Moving Forward With Your Finances
Instead of banking on a political miracle, the smartest move right now is to focus on what you can control. The "affordability crisis" is real, and while the 10% cap proposal is making waves, it’s currently more of a political weapon than a functional policy.
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Keep an eye on these specific triggers over the next few months:
- The DOJ’s investigation into Powell: If he’s forced out, expect the markets to freak out.
- The Jan. 20 "deadline": If no executive order appears, the credit card cap might just be campaign trail talk.
- Inflation data: If it stays above 3%, the Fed won't budge, no matter how much Trump posts about it.
Your best bet is to stay liquid and stay skeptical. The noise is loud, but the numbers don't lie.