President Donald Trump’s call for a temporary 10% cap on credit card interest rates, if implemented, could have significant impacts — both positive and negative — for borrowers.
“Effective January 20, 2026, I, as 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 provide details on how his plan would come to fruition or how he planned to make credit card issuers comply. It is also unclear whether Trump’s proposal would pertain to new or existing balances.
A White House official told CNBC that additional details on the president’s proposal would be forthcoming.
‘A really, really big deal for credit cardholders’
“A credit card rate cap is enormously popular with Americans,” said Matt Schulz, chief credit analyst at LendingTree. “That’s why we’ve seen big names on both sides of the aisle propose credit card rate caps in recent years, including President Trump, who also floated the idea while on the campaign trail in 2024.”
Currently, about 175 million people in the U.S. have credit cards, according to the Federal Reserve Bank of New York. While some pay off the balance each month, roughly 60% of credit card users have revolving debt, the New York Fed said. That means they pay interest charges on the balances they carry from month to month.
About 61% of cardholders with credit card balances have been in debt for at least a year, up from 53% in late 2024, according to a new Bankrate survey.
The average credit card interest rate in the U.S. fell to 23.79% in January, marking the lowest level since March 2023 and continuing several months of declines, according to LendingTree.
If there were a rate cap, “there’s no question that it would be a really, really big deal for credit cardholders,” Schulz said.
For example, if you put $250 a month toward the average credit card balance of $7,000 with an annual percentage rate of 23.79%, it would take you 41 months to pay off the debt and cost more than $3,314 in interest over that time period, Schulz calculated. At 10%, those same payments could pay off the debt in 32 months and cost just $1,004 in interest.
Banks could curb credit access
Still, getting such a proposal off the ground would be difficult, other experts say. A rate cap “is something the financial industry will fight hard,” said Ted Rossman, senior industry analyst at Bankrate.
Even as the Federal Reserve has lowered its benchmark rate, the average credit card APR has barely budged, in part because credit card issuers are mitigating their exposure against borrowers who may fall behind on payments or default.
“This would be a huge hit to banks, credit card lenders and payment networks,” Rossman said.
Banking insiders told CNBC that a cap would result in issuers curbing access for consumers with poor credit, and drive borrowers toward less-regulated or more costly alternatives, such as buy now, pay later and payday loans.
“Evidence shows that a 10% 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.
A 10% cap “would be beneficial in the short-term” for consumers who carry debt, said WalletHub CEO Odysseas Papadimitriou. “But once they eliminate their debt, they won’t be eligible for more credit.”
Effects could include higher fees, fewer rewards
Anna Barclay | Getty Images
Banks make money off credit cards in three ways: Transaction fees to merchants, known as “swipe fees,” fees charged to consumers and interest on carried balances.
“Even with a 10 percent cap, credit cards will remain among the most profitable businesses in banking, generating more than $150 billion in annual swipe fees and billions more in fees, all before the tens of billions in interest that will remain available under a cap,” said Adam Rust, director of financial services at the Consumer Federation of America.
Banks could add or increase fees and change repayment structures to make up for any loss in interest revenue, experts say. They could also tinker with rewards programs.
Under Trump’s proposal, “I would envision sharp cutbacks in access to credit and rewards programs,” Rossman said. “This would completely upend the credit card market as we know it.”
Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator for Political Economy and Regulation, a research center at Vanderbilt University, told CNBC the potential effect on rewards is “a far overblown downside.”
Industry profit margins are significant enough that capping interest rates at 18% or 15% “would save Americans $16 billion and $48 billion annually, respectively, with no impact to rewards or lending volumes,” according to a September analysis by Shearer.
A 10% cap would save Americans $100 billion in interest, the analysis found, 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 savings on interest that those same people would get.”
A 2024 LendingTree survey found that most Americans still support a cap even if it leads to restricted credit and diminished rewards.
Steps to help secure a lower rate
While consumers shouldn’t count on a 10% cap on card rates happening this month — or at all — there are steps to take now to qualify for lower rates.
Cardholders who pay their balances in full and on time and keep their utilization rate — or the ratio of debt to total credit — below 30% of their available credit can boost their credit score. Better credit paves the way to lower-cost loans and better terms going forward.
“Improving your credit score will put you in the lower risk basket so that at 10%, banks can still make money,” said Papadimitriou.
People with good credit who ask their lender for a lower rate often get it, surveys from LendingTree show.
“You don’t have to wait for a rate cap to lower your card’s interest rates, said Schulz. “A 0% balance transfer credit card can help you avoid interest entirely, often for more than a year, and is likely your best tool against card debt.”
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