Affordability promise meets financial industry resistance
President Donald Trump’s proposal to impose a one year cap of 10 percent on credit card interest rates has reignited a long running debate over consumer affordability and the role of Wall Street in household finances. The plan is framed as short term relief for Americans struggling with high borrowing costs, but it has drawn sharp criticism from major banks and raised questions about its real economic impact.
The average US credit card interest rate currently stands at 19.64 percent, according to Bankrate. Trump has said he wants the cap in place by January 20, though it remains unclear whether this would require legislation or voluntary participation from card issuers.
Banks warn of reduced credit access
Executives across the financial sector argue that a strict interest rate cap would have unintended consequences. Citigroup chief financial officer Mark Mason warned that limiting rates would restrict access to credit for borrowers who need it most and could hurt overall economic growth.
Bank of America chief executive Brian Moynihan echoed those concerns, saying lower caps would likely reduce the number of people who qualify for credit cards and shrink available credit limits. Leaders at JPMorgan Chase and Citigroup have also publicly stated they do not support the proposal.
Supporters argue savings outweigh drawbacks
Advocates of reform counter that credit card interest has become a major burden for households and a significant profit center for banks. Brian Shearer of the Vanderbilt Policy Accelerator said a 10 percent cap could save Americans as much as $100 billion annually in interest payments.
His research suggests that while consumers could see fewer rewards and slightly tighter lending conditions, most borrowers would still come out ahead due to lower interest costs. Supporters argue that banks could absorb the changes by reducing advertising spending and adjusting reward programs rather than exiting the market.
Record credit card debt adds urgency
US households held $1.23 trillion in credit card debt in the third quarter of 2025, the highest level on record since 1999, according to the Federal Reserve Bank of New York. Balances rose nearly six percent from a year earlier, underscoring the scale of the affordability challenge.
Some analysts note that Trump’s proposal contrasts with his administration’s broader record of financial deregulation and cuts to the Consumer Financial Protection Bureau. Critics argue the focus should instead be on capping late fees and curbing industry practices that disproportionately harm lower income consumers.
Political uncertainty ahead of midterms
With US midterm elections approaching, the proposal has taken on political significance. Former lawmakers such as Pat Toomey have dismissed the idea as ineffective, saying it risks reducing credit availability without solving the underlying causes of high consumer debt.
Even supporters of reform remain skeptical that the White House will follow through. Former CFPB director Rohit Chopra said there is room for meaningful change in the credit card industry, but doubts the administration will ultimately challenge banks in a sustained way.