What Trump proposed – and what actually happened
On January 9, 2026, President Trump posted on Truth Social calling on credit card companies to cap one-year interest rates at 10%, effective January 20. CNBCthe deadline came and went without even one major bank adhering to it.
There’s a reason for that: the president doesn’t have the authority to cap credit card rates by executive order. There is no federal law limiting interest on credit cards, and according to the Monitor consumer financeAny interest rate cap would require legislation from Congress.
Trump has since moved on to asking Congress to pass a law — but no bill has been introduced.
22.3%Average credit card rate
10%Proposed rate limit
Why it sounds good on paper
Let me be honest: the figures behind this proposal are real. Average credit card rates have risen from 16.28% in 2020 to over 22% today. Americans have a record $1.23 trillion in credit card debt. According to RealClearMarkets60% of cardholders take at least a year to pay off their balance.
If you carry $7,886 (the average balance) at 22%, you’ll pay about $1,735 per year in interest. At 10% that drops to about $789. That’s real money for people who are already having a hard time.
- Would save consumers an estimated $100 billion per year
- Bipartisan support: Both Sanders (D) and Hawley (R) supported a similar bill
- Goes straight into record high interest rates
- Would immediately reduce the cost of existing debt
Why it could have an adverse effect
This is the part no one wants to hear. Credit cards are expensive at 22%. But at least they exist. According to CNBCThe Bank Policy Institute estimates that a 10% cap would eliminate or limit credit access for more than 14 million U.S. households.
Why? Because lending to higher risk borrowers at 10% is not profitable. Banks would simply stop issuing cards to anyone with less than perfect credit.
The unintended consequence: The people who need help most – those who carry balances because they can’t make ends meet – would be the first to lose access to credit completely. They would be pushed towards payday loans, which charge effective rates of 300-750%.
- More than 14 million households could lose access to their credit cards
- Higher risk borrowers pushed for payday loans at 300%+ annual interest rates
- Banks would dramatically tighten approval criteria
- The availability of credit is decreasing for people who are already struggling
- The one-year limit creates an abyss: what happens when it expires?
Both sides are missing the point
Politicians like rate caps because it sounds like they’re doing something. Banks hate interest rate caps because they cut into profits. Both are arguing about the wrong thing.
A rate cap treats the symptom without addressing the disease. The problem isn’t that credit cards charge 22% interest; the problem is that there is $1.23 trillion in debt for millions of Americans because the math is wrong for millions of Americans. Capping the rate doesn’t solve the math.–Steve Rhode
No one wakes up wanting to carry $8,000 in credit card debt. They do it because:
- The income does not cover the costs — Wages have not kept pace with inflation
- Medical emergencies — One hospital visit can cause years of debt
- Job loss — Cards become a survival tool during unemployment
- Financial illiteracy — Many people don’t understand how compound interest works
- Mental health — Depression and anxiety lead to compulsive spending patterns
A 10% rate cap will not solve these problems. It just makes the debt a little cheaper as it piles up.
What would actually help
Instead of debating rate caps, here’s what would make a real difference for people drowning in credit card debt:
What would actually work
- Requires plain language disclosure of the total cost of maintaining a balance
- Ban retroactive interest rate increases on existing balances
- Strengthen bankruptcy protection so people aren’t afraid to use it
- Requires financial literacy in public education
- Address the income gap that forces people to borrow
What doesn’t work
- Rate caps without addressing access – shifts borrowers to worse products
- Shaming people for using credit ignores why they need it
- Voluntary compliance requests – banks will not voluntarily lose money
- One-year temporary fixes — create uncertainty, solve nothing
What to do if you have credit card debt
Whether the rate limit applies or not, this is what is important to you at the moment:
- Don’t wait for politicians to solve this – There will be no rate ceiling anytime soon. Take action on your own timeline.
- See ALL your options — Balance transfers, consolidation, credit counseling, settlement, and bankruptcy all exist for different situations. Don’t limit yourself to the option that benefits someone.
- Protect your pension — Never cash out a 401(k) to pay off credit card debt. That money is protected from creditors and debt over time.
- Discuss what broke the math — Is it income, expenditure, a crisis or a pattern? The solution depends on the cause.
- Don’t let shame drive decisions — Credit card companies are companies that make calculated risk decisions. You should make yours based on math, not guilt.
Where do you actually stand? Take the free Find Your Path quiz. It takes less than a minute and gives you a personalized starting point based on your real numbers – not on political promises that may never materialize.
Sources
- CNBC – Trump’s original proposal and the January 20 deadline
- CNBC — Enforcement process and risk analysis of the banking sector
- RealClearMarkets — Economic analysis of the consequences of interest rate ceilings
- Monitor consumer finance — Legal analysis of the tariff cap authority
- NPR — Political context and bipartisan support
Frequently asked questions
Will there be an interest rate cap on credit cards in 2026?
No. President Trump has called on credit card companies to voluntarily cap rates at 10% by January 20, 2026, but no banks have complied. There is no federal law limiting interest on credit cards. Trump has since asked Congress to pass legislation, but no bill has been introduced. Currently, the average rates are still above 22%.
Would a 10% cap on credit card rates help consumers?
It would help people who already carry a balance by reducing their interest costs – collectively saving $100 billion a year. However, the Bank Policy Institute estimates that more than 14 million households could lose access to their credit cards because loans to borrowers with a higher risk of 10% would not be profitable. Those consumers could be pushed toward payday loans with much higher effective rates.
Can the President cap interest rates on credit cards?
No. The president does not have the legal authority to unilaterally cap credit card rates. According to the CFPB, there is no generally applicable federal law limiting interest rates on credit cards. An interest rate cap would require legislation by Congress. Trump’s initial announcement was essentially a request, not an order.
What should I do about high credit card interest rates?
Don’t wait for a political solution. Review all your options: balance transfer cards (often 0% for 12-21 months), debt consolidation loans at lower rates, credit counseling, debt management plans, debt settlement or bankruptcy. The right choice depends on your specific situation: how much you owe, your income and what caused the debt. Protect your pension above all else.
TL; DR: Trump proposed a 10% cap on credit card rates. Banks ignored it. Congress has not acted. Even if the bill passes, it would help some consumers and cut off credit access for more than fourteen million others. The real problem is not the interest rate; it is the $1.23 trillion in debt resulting from income disparities, emergencies and incorrect calculations. Don’t wait for political solutions. Review your options now and make a decision that protects your future.
(Source: CNBC / RealClearMarkets / NPR / Consumer Finance Monitor)
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