President Trump has called for credit card companies to lower interest rates to 10 percent for one year. In a January 9 post on Truth Social, he stated these companies must comply by January 20 or face being "in violation of the law."
The proposal to cap rates at 10 percent is not new. Trump discussed it during his presidential campaign. Last year, senators introduced a bipartisan bill seeking a similar five-year cap.
On Tuesday, JPMorgan Chase CFO Jeremy Barnum addressed the potential impact during a fourth-quarter earnings call. He warned a rate cap could reduce available credit, which "would be very bad for consumers, very bad for the economy."
No details exist on how such a cap would be implemented or enforced without congressional legislation. Experts note it could have lasting effects for cardholders.
Currently, the average credit card interest rate for accounts carrying a balance is 22.30 percent. This figure has risen significantly from 13.35 percent in mid-2016. A 2024 Consumer Financial Protection Bureau analysis found increased credit card margins accounted for about half of the overall rate rise over the prior decade.
A 10 percent cap could offer savings for the 46 percent of American households with credit card debt. Lower rates may help pay balances faster, with less going toward interest.
However, the cap would last only one year, according to the social media post. "Credit card interest rates are set by the market and based on the borrower," said Yaël Ossowski, deputy director of the Consumer Choice Center, in an email. "After a temporary one-year cap, rates will rebound to levels that better reflect each individual's financial risk and creditworthiness."
For example, a $6,000 balance at a 22 percent APR would require monthly payments of at least $561 to pay off in a year. At 10 percent, monthly payments could be $527, saving over $400 in interest. Making only minimum payments at 22 percent would incur about $10,000 in interest over nearly 25 years. With a one-year 10 percent cap, total interest could be reduced by nearly $1,000, though minimum payments remain costly.
Banking industry groups issued a joint statement on January 9. They said a 10 percent cap "would reduce credit availability and be devastating for millions of American families and small business owners who rely on and value their credit cards." America's Credit Unions stated, "capping rates at 10% does not make credit more affordable, it makes it unattainable for millions of working Americans."
Ossowski added that forcing a low rate could lead banks to stop offering credit, pushing consumers toward riskier options like payday loans. "Those interest rates are not capped and are extraordinarily high," he said.
Rewards programs could also be affected. "The most lucrative bank rewards programs are made possible in part by the interest fees," said Tiffany Funk, co-founder of point.me. Without that revenue, banks might raise annual fees or reduce points value. Funk suggested cardholders evaluate rewards on a card-by-card basis.
Consumers seeking to pay down debt now can consider balance transfer cards with introductory 0% APR offers, which can provide longer interest-free periods than the proposed one-year cap.