In a dramatic move that has ignited fierce debate across the political and financial spectrum, President Donald Trump has announced a one-year cap on credit card interest rates, limiting them to 10%.
A Surprise Announcement Met With Immediate Skepticism
The president made the announcement via a post on his Truth Social platform on Friday night, stating the restriction would take effect on 20 January. He framed the move as a corrective measure, accusing credit card companies of having "ripped off" the American public with rates of 20% to 30% during the Biden administration.
However, the announcement was notably light on detail, offering no explanation of how the government would enforce the cap or ensure compliance from lenders. This lack of specifics led to immediate questions about the president's authority to implement such a sweeping change without approval from Congress.
Mounting Debt and a Stalled Legislative Effort
The pledge to cap rates was a feature of Trump's campaign for a second term, made as American credit card debt soared. The debt has continued to climb, reaching a record $1.17 trillion in the third quarter of 2024, up from $770 billion in early 2021.
Frustrated by the lack of action on this campaign promise, Senators Bernie Sanders and Josh Hawley introduced a bipartisan bill in February 2025 to cap rates at 10% for five years. Sanders had criticised the president just hours before Trump's own announcement, writing on social media that Trump had "deregulated big banks" instead of fulfilling his pledge.
The senators' bill, which faced major opposition from banking groups, has not progressed in Congress.
Industry Warns of Credit Crunch, Lawmakers Divided
The reaction to Trump's announcement has been sharply divided. Banking associations issued a joint statement warning that a 10% cap would "reduce credit availability" and be "devastating" for millions of families and small businesses, potentially driving consumers towards riskier, unregulated lenders.
Billionaire hedge fund manager and Trump supporter Bill Ackman initially called the plan "a mistake," warning it could lead to mass cancellations of credit cards for subprime borrowers. He later softened his tone but maintained his concerns.
Senator Elizabeth Warren expressed deep scepticism, stating, "Begging credit card companies to play nice is a joke," and accusing the president of caring little about affordability.
In contrast, Senator Josh Hawley praised the move, writing "Fantastic idea. Can’t wait to vote for this." The announcement has thus created an unusual political alignment, with progressive Sanders and conservative Hawley finding rare common ground in support of the cap, even as the path to its enactment remains deeply uncertain.
