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As of early 2026, the average credit card interest rate in the U.S. is approximately 20%. This figure can vary based on factors like the borrower's credit score and the type of credit card. The proposed cap by President Trump at 10% represents a significant reduction, aimed at making borrowing more affordable for consumers.
Interest rate caps can significantly impact banks' profitability, especially for those heavily reliant on credit card interest as a revenue stream. A cap at 10% could lead to reduced earnings and may force banks to tighten lending standards, potentially limiting credit availability for consumers with lower credit scores.
President Trump's rationale for capping credit card interest rates at 10% is to protect consumers from what he describes as excessive charges by credit card companies. He argues that this measure would alleviate financial burdens on Americans, especially amid rising costs of living and economic uncertainty.
Potential consequences of the proposed cap include reduced access to credit for millions, as banks may cut back on lending to offset lost revenue. Additionally, it could lead to higher fees for other banking services or push consumers towards less regulated financial products, which may carry higher risks.
Consumer reactions to the proposal have been mixed. Some view the cap as a necessary measure to reduce financial strain, especially for those carrying credit card debt. However, others express concern that it might lead to tighter credit conditions, ultimately harming those who rely on credit cards for everyday expenses.
Historically, interest rate caps have been implemented in various forms, often during economic crises. For example, the U.S. imposed usury laws in the 1970s to limit interest rates on loans. Similar measures have been seen in other countries, but they often face significant pushback from financial institutions and can lead to unintended market consequences.
Experts are divided on the feasibility of Trump's proposed cap. Some argue that while it could benefit consumers in the short term, it poses risks such as reduced lending and financial instability. Others believe that the cap could lead to a significant restructuring of the credit market, potentially harming lower-income borrowers the most.
Lower-income borrowers may face the brunt of the cap's consequences. With banks likely to tighten lending criteria to mitigate losses from capped interest rates, these consumers might find it harder to obtain credit. This could exacerbate financial inequalities, as they may already struggle to access affordable credit.
Financial markets have reacted negatively to the proposal, with bank stocks experiencing declines. Investors are concerned about the potential impact on banks' profitability and the broader implications for the financial sector. The uncertainty surrounding the cap has added to existing volatility in the markets.
The proposal comes amid a backdrop of rising living costs and economic uncertainty, with many Americans facing financial stress. Trump's focus on capping credit card interest rates reflects broader concerns about affordability and consumer protection in a challenging economic environment, particularly as inflation remains a pressing issue.
