Trump pushes for 10% cap on credit card interest rates

WASHINGTON, D.C. –

On January 9, President Donald Trump announced that he wanted banks to cap the interest rates on their credit cards at 10%. He made the announcement in the form of an ultimatum, giving credit card companies until January 20 to comply. Three days later, aboard Air Force One, the president said this to reporters:

“I want a cap on credit card interest rates because, you know, some of them are 28%, almost 30%. And people don’t know they’re paying 30%. The people out there, you know, they’re working and they have no idea that they’re paying 30%. No way. We’re putting a 1-year cap at 10%, and that’s it. They (the banks) know it. They’ve really, they’ve really abused the public. The credit card companies have totally abused — I’m not going to let it happen.”

It was not clear under what authority the president could implement such a requirement, little further guidance was provided and the Jan. 20 deadline had not changed. But the president has apparently not dropped the idea. Wednesday, in his big speech at the World Economic Forum in Davos, Switzerland (in front of an audience of banking and finance leaders), Trump said this:

“I’m asking Congress to cap credit card interest rates at 10% for one year. And this will help millions of Americans save for a home. They have no idea they’re paying 28%. They go out there a little late in their payment and they end up losing their house. It’s terrible.”

The notion of capping credit card interest rates is not new. It has, in recent years, been pushed primarily by those on the progressive left, such as Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA), although some Republicans, like Missouri’s Josh Hawley, also believe it would greatly benefit low- to middle-income Americans. According to multiple sources, the average American currently carries a credit card balance of about $6,500 and pays monthly interest, on average, of 20 percent. Total credit card debt in the United States is estimated to be $1.2 trillion.

Price controls, however, go against the grain for most conservatives, who prefer to let the free market, and not government, set interest rates.

Here’s what Speaker of the House Mike Johnson (R-LA) said about the president’s idea at a news conference last week:

JOHNSON: “It’s one of a long, large menu of ideas that have been proposed as something we ought to think about and investigate. Since I had the conversation with (President Trump), I’ve talked to a number of colleagues about that and what that would mean and, you know, are there unintended consequences of that, and it’s, you know, it’s a, it’s a complicated area. So, I don’t know. Like everything else, uh, we, you know, you would need legislation to do something like that, and we’d have a lot of work to build consensus around it. But you’ve got to be very careful if you go forward in that, in our zeal to bring down costs, you don’t want to have negative secondary effects of that. So, for example, one of the things that the president probably had not thought through at first glance — it sounds great, we should bring down, you know, interest rates at 10%, it would help everybody, all borrowers. There’s a lot of Americans who have a lot of credit card debt, but then, you know, what some of the experts have said is, well, but the problem is, if you do that, then the credit card companies, the negative secondary effect is that is that they would just stop lending money and maybe they cap what people are able to borrow at a very low amount. And then that would have a negative effect on a lot of people who, you know, work on revolving credit. So it’s something that we’ve got to be very deliberate about. The president understands that—he wants us to do the right thing by Americans.”

And, in an interview on Wednesday, here’s what Oklahoma Congressman Kevin Hern (R-OK1) said about the idea:

HERN: “Yeah. I mean, price controls have never worked long term. We’ve seen this time and time again by both presidents tried to do this. I think the president’s really working hard right now to give some immediate relief to the American people. They struggled four years of incredible inflation under the Biden administration, some 23% increase in pricing, the cost of goods for pretty much everything. So he’s working right now to do this. It would take, to make that codified, we’d have to take it to Congress to do that. And so we are always concerned. We want the free markets to work. And I think what will happen, if we do this…what’s going to happen is you’re going to see credit cards being pulled back from maybe those who knew temporary credit. So, but I think for a short period of time, it’s a way to, you know, give reprieve to those who need it.”

…on whether he would be willing to support such a measure:

HERN: “I don’t think there’ll be support to do this from a congressional standpoint because, anytime you put anything into law, then it always wants to be rolled forward. I think once the federal government gets into the private markets, there’s going to be a challenge there. So we have to see how this plays out. You know, the devil’s always in the detail. So we’ll just see what works, what looks like when we get ready to do it.”

…on the likelihood this might only end up hurting those it’s intended to help:

HERN: “Well, price controls doesn’t really work anywhere. If you look—even if you’re capping insulin, the pharmaceutical companies just move the prices elsewhere into the private markets. But, for a temporary relief, they could be something that’s, you know, that’s really what the American people need. You know, we’ve we’re seeing the economy grow twice as fast as what CBO and the Ivy League economists said would happen: 4.3% in the fourth quarter. What we’re seeing in wage growth, it’s surpassing the inflation growth. We saw inflation at 2.6% in the fourth quarter. All these are positive directions. They’re just moving slowly. certainly for all of us and the president. The president’s the only person that has the ability to move very quickly on certain things. I think you’re going to see this happen. He’s doing this with pharmaceutical companies and forcing them to, you know, to lower drugs in certain areas. It can help, you know, Americans that aren’t, you know, healthy, need health issues to go forward. So I think a lot of these are important—whether they can be codified in law, we’ll see.”