Trump Targets Wall Street With 10% Credit Card Interest Cap Proposal

In a move that has sent shockwaves through the financial sector, President Donald Trump announced on Friday a proposal to cap credit card interest rates at 10% for one year. Framed as a cornerstone of his “Affordability” agenda, the President’s plan seeks to slash the national average interest rate—which currently hovers above 23%—to a level not seen in decades. The announcement, timed to coincide with the upcoming one-year anniversary of his second inauguration on January 20, 2026, positions the administration in a direct confrontation with the nation’s largest banking institutions.

The “Affordability” Mandate

In a series of social media posts, President Trump criticized credit card companies for “ripping off” the American public with rates that often range from 20% to 30%. He argued that these “extortionary” figures have “festered unimpeded” and represent a significant burden on middle-class families struggling with the lingering effects of inflation.

While the President has not yet detailed whether this will be achieved through executive order, regulatory pressure via the Consumer Financial Protection Bureau (CFPB), or legislative action, his allies in Congress have already signaled their support. Senator Josh Hawley (R-MO), who has previously co-sponsored similar bipartisan legislation with Senator Bernie Sanders (I-VT), hailed the move as a “fantastic idea,” stating he “can’t wait to vote for this.”

The reaction from the financial services industry was swift and overwhelmingly negative. Large bank CEOs and industry trade groups warn that a hard cap would lead to a “credit crunch” that could leave millions of Americans without access to revolving credit.

“A 10% interest rate cap would reduce credit availability and be devastating for millions of American families and small business owners,” the coalition stated. “If enacted, this cap would only drive consumers toward less regulated, more costly alternatives like pawn shops and loan sharks.” 

Billionaire hedge fund manager Bill Ackman, a prominent Trump supporter, also voiced concerns. While calling the goal of reducing rates “worthy and important,” Ackman warned that the proposal is a “mistake” that would “inevitably cause millions of Americans to have their cards canceled as credit card companies lose the ability to adequately price subprime credit risk.”

Potential Economic Consequences

Economists are divided on the long-term effects of such a drastic intervention. Supporters argue that it would provide immediate relief to the estimated 195 million Americans who carry credit card debt, potentially saving consumers over $100 billion in interest payments over the course of the year.

However, analysts at Quiver Quantitative and MarketWatch point out several “unintended consequences” that could follow:

• Mass Cancellations: Banks may close accounts for borrowers with lower credit scores (subprime) because the 10% cap would not cover the historical default rates of those groups.
• Loss of Rewards: The high interest rates currently fund popular cash-back and travel reward programs. A 10% cap would likely lead to the immediate elimination of these perks.
• Increased Fees: To offset lost interest revenue, banks might implement higher annual fees or transaction costs.

Looking Ahead

The path forward remains legally and politically complex. Critics, including Senator Elizabeth Warren (D-MA), have dismissed the proposal as “a joke” without a formal bill, noting that a president cannot unilaterally set interest rates for private contracts without Congressional approval. As the January 20 deadline approaches, the administration is expected to face intense lobbying from Wall Street while simultaneously pushing a populist message to voters ahead of the midterm elections.

Sources & Links

• Bloomberg Law: Trump Calls for One-Year Cap on Credit Card Rates at 10%
• The Guardian: Trump announces one-year 10% cap on credit card interest rates
• CBS News: Trump urges credit card companies to slash interest rates to 10%
• Washington Post: Banks criticize Trump’s push for 10 percent credit card interest rate cap
• MarketWatch: Trump says he’ll cap credit-card interest rates at 10% as Americans battle soaring debt