On January 10, 2026, President Donald Trump announced a proposal to implement a one-year cap on credit card interest rates at 10%. He claims this measure could save American consumers tens of billions of dollars annually. The proposal is set to take effect on January 20, coinciding with the anniversary of his return to the White House. However, it remains unclear whether the cap would be enforced through government regulation or voluntary compliance from credit card companies.

Trump emphasized affordability as a key reason for the cap, a topic he previously addressed during his 2024 campaign. He attributed high credit card rates to the policies of former President Joe Biden, highlighting the rising cost of living as a significant concern for many Americans. This proposal marks a notable shift for Trump, who had previously supported the repeal of an $8 credit card fee limit established by the Biden administration, which the Consumer Financial Protection Bureau (CFPB) estimated would save families over $10 billion annually.

The banking sector has expressed strong opposition to Trump's proposal, warning that a 10% interest rate cap could lead to reduced credit availability and negatively impact consumers and small businesses. Industry groups, including the Bank Policy Institute and the American Bankers Association, released a joint statement indicating that while they share the goal of making credit more affordable, evidence suggests that such a cap could ultimately harm those it aims to assist. They cautioned that implementing this cap could drive consumers toward less regulated and more expensive credit options, potentially exacerbating economic disparities.

Currently, Americans are paying average credit card interest rates between 19.65% and 21.5%, according to the Federal Reserve. Research indicates that capping these rates at 10% could lead to approximately $100 billion in savings for consumers each year. However, the credit card industry would likely experience a significant reduction in profits, which could result in stricter lending standards and limit access to credit for lower-income individuals and those with lower credit scores.

Legislation to cap interest rates is being discussed in both the House and Senate, with proposals from Senators Bernie Sanders and Josh Hawley, as well as Representatives Alexandria Ocasio-Cortez and Anna Paulina Luna. Sanders has criticized Trump for previously deregulating banks, which allowed for higher credit card fees, suggesting that the president's current proposal may be inconsistent with his past actions.

The Trump administration has historically favored the credit card industry, allowing significant mergers and maintaining a largely inactive CFPB. Critics argue that while the proposal aims to reduce costs for American families, it may inadvertently lead to greater financial challenges for those already facing economic pressures. The U.S. currently enforces interest rate caps on certain financial products, such as the Military Lending Act, which prohibits charging active-duty service members more than 36% interest.

As discussions continue, the implications of this proposal remain to be seen, particularly in the context of the widening wealth gap in the United States, where lower-income individuals face increasing financial burdens compared to wealthier individuals benefiting from stock market gains and rising home prices.