President Donald Trump made news in January 2026 by declaring a planned 10% interest rate cap on credit cards. But he was hardly the only one to propose such a regulation. Trump’s announcement came almost one year after the 10% Credit Card Interest Rate Cap Act was introduced in Congress by Sen. Bernie Sanders (I-VT). Sanders’ cosponsor on the bipartisan proposal was Sen. John Hawley (R-MO), a longtime Trump supporter.
The act proposed a 10% cap on credit card rates for five years. Two other Democrats, Sen. Jeff Merkley (OR) and Sen. Kirsten Gillibrand (NY) later signed on as additional cosponsors of the legislation.
Let’s take a look at the nitty gritty of the 10% Credit Card Interest Rate Cap Act, how it compares to the President’s proposal, and how likely it is that any rate cap will emerge from Washington and bring debt relief to Americans soon.
Table of Contents
Key Points
• The 10% Credit Card Interest Rate Cap Act was introduced in Congress in February 2025 by Sens. Bernie Sanders (I-VT) and John Hawley (R-MO).
• It would cap the total cost of credit, including interest and fees, at 10% for consumers in good standing, amending the Truth in Lending Act.
• Currently, the legislation has not advanced out of committee in the Senate, while average credit card interest rates remain near 20%.
• Proponents argue the cap would save consumers over $100 billion annually.
• Opponents, including credit card issuers, warn that the cap could lead to reduced lending for customers with the lowest credit scores and potentially fewer rewards for all consumers.
What Is the Proposed 10% Credit Card Interest Rate Cap Act?
The 10% Credit Card Interest Rate Cap Act proposed in February 2025 by Sens. Sanders and Hawley would amend Section 107 of the Truth in Lending Act to state that, “The annual percentage rate [APR] applicable to an extension of credit obtained by use of a credit card may not exceed 10 percentage points, inclusive of all finance charges.” Translation: The all-in cost of borrowing for a credit card user in good standing could not exceed 10%.
Current credit card rates at the time the act was proposed were routinely more than 20%. What is the APR on a credit card? The APR is not just the interest the lender is charging for borrowing money; it also includes any mandatory fees the lender charges. (So a card’s APR may be somewhat different from its interest rate.) “This legislation will provide working families struggling to pay their bills with desperately needed financial relief,” Sanders said when he proposed the act.
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How Does the 10% Credit Card Interest Rate Cap Act Work?
The act, if passed, would bar credit card issuers from creating a schedule of interest and fees such that a customer’s APR would exceed 10%. But there’s more to it than that.
The act outlines a powerful penalty: Financial institutions that knowingly exceed the 10% cap could be subject to a “forfeiture of the entire interest” charged on the balance. Sanders, Hawley et al proposed to put in place a mechanism for consumers to be refunded their interest payments if they complained about the overcharge within two years.
Here’s the catch: The 10% Credit Card Interest Rate Cap Act is thus far, as they say in Washington, “stuck in committee.” To date, the legislation has not progressed beyond the Senate Committee on Banking, Housing, and Urban Affairs, and so has not been considered by the full Senate or the House of Representatives. Meanwhile, interest rates have continued to hang out at around the 20% mark.
Why Is the 10% Credit Card Interest Rate Cap Act Being Proposed?
To understand why the senators proposed the act, it helps to look at the history of credit card interest rates. Currently there is no federal law that caps the interest a bank or other lender can charge on a credit card, with one exception: Credit card interest rates are capped at 36% for active-duty military service members and their covered dependents under the Military Lending Act.
For much of the last three decades, rates ranged from roughly 11% to 16%. But starting in mid-2022, average credit card interest rates began a steady march upward, topping out (for now) at 21.76% in August 2024 and declining only modestly since then, according to data compiled by the Federal Reserve Bank of St. Louis. Keep in mind that this is an average rate, meaning that for some consumers, the rate could be more like 30%.
As interest rates have climbed, so has consumer credit card debt. Credit card balances rose by $24 billion between the second and third quarter of 2025, reaching $1.23 trillion by September 2025. This is a 5.75% year-over-year increase.
About one in eight credit card accounts are now 90 or more days delinquent, according to a November 2025 report by the Federal Reserve Bank of New York. So the proposed legislation and the President’s post come at a time when more Americans are struggling to become debt free. Many are exploring how debt consolidation works and looking at personal loans as a possible solution.
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Pros and Cons of the 10% Credit Card Interest Rate Cap Act
The idea of a 10% APR ceiling has its supporters, as we’ve seen. But not everyone is enthusiastic. As you might imagine, companies that issue credit cards aren’t eager to have interest rates regulated. These are some pros and cons expressed by both sides and by independent researchers.
Pros
Advocates of a credit card interest cap say it’s a way to lower credit card debt and ensure financial stability for more Americans. Researchers at Vanderbilt University computed savings and reported that a 10% APR cap would produce over $100 billion in annual savings. These savings would be concentrated among credit card users with FICO® scores in the 640 to 740 range, primarily because those borrowers are carrying the largest balances. But ultimately, the researchers wrote, “customers in every tier would save far more (at least 3x) in interest than they would lose in rewards.”
Cons
Credit card companies have argued against a rate cap in the wake of the Trump proposal, saying that a 10% cap would make some consumers (those with the lowest credit scores) ineligible for credit cards. From a lender’s standpoint, these are the riskiest customers, the theory goes. So curbing the amount a company might charge could make this part of the business unprofitable, thereby discouraging lending to this group.
(The Vanderbilt researchers estimate that cards held by consumers with a credit score of 600 would be unprofitable, but point out that this is a relatively small portion of the credit card market, and banks and lenders might find other ways to make up the profits.)
Banks have also argued that a 10% cap would make lending less profitable, reducing economic activity and forcing retailers, airlines, and other merchants to increase their prices to compensate for lost business.
Financial institutions will want to cut costs somehow in order to maintain profits in their credit card business. It is possible that rewards will be trimmed for some card users, with decisions being made according to usage levels and credit scores.
How to Reduce Credit Card Interest: Example Scenarios
A back and forth over a 10% APR cap is happening, but thus far there are no concrete changes coming for credit card consumers. Congress will need to get more deeply involved if a rate cap is to become real. In the meantime, as we wait for the dust to settle on the President’s proposal and for the 10% Credit Card Interest Rate Cap Act to perhaps make its way out of committee, there are steps consumers can take on their own to lower the APR on a credit card. Consider these scenarios:
The 0% APR offer. People interested in avoiding interest on credit cards can sometimes find cards with a 0% introductory APR and transfer their balance to the new card, thereby avoiding interest for 12 to 18 months while making payments against the principal. If this appeals to you, look for credit card promotional interest rates online.
The extra payment strategy. Trimming your balance can help reduce the amount of interest you pay each month. Some card users follow the 15/3 credit card payment schedule, making two payments each month — one 15 days before their payment is due and the other 3 days before the due date. This can help them pay down debt faster and thus reduce carrying costs.
The fine-print test. Cards with cushy perks might be appealing, but if you’re in the market for a new credit card, examine the specific details on cash back vs. low interest credit cards to ascertain which might cost you less over the long haul. Don’t just look at the APR, but also factor in the likelihood that you will (or won’t) see funds come your way thanks to the cash-back feature. What good is an airline card that gets you free checked bags, for example, if you hardly ever fly anywhere — or rarely fly that carrier?
Of course, using a credit card responsibly is another way to minimize additional charges beyond interest costs. Late fees can cost upward of $30. (Incidentally, in April 2025, the Trump Administration rolled back a Biden-era cap on credit card late fees of $8.)
The Takeaway
The 10% Credit Card Interest Rate Cap Act was introduced in Congress in early 2025 but has not yet progressed past the committee stage. So for now, consumers are still looking at credit card interest rates that are closer to 20% than to 10%. Fortunately, there are strategies consumers can use to lower interest costs as we await more news on the proposed act and on another, more recent, interest-rate cap proposed by President Trump.
Whether or not you agree that credit card interest rates should be capped, one thing is undeniable: Credit cards are keeping people in debt because the math is stacked against you. If you’re carrying a balance of $5,000 or more on a high-interest credit card, consider a SoFi Personal Loan instead. SoFi offers lower fixed rates and same-day funding for qualified applicants. See your rate in minutes.
FAQ
Is Trump trying to reduce interest rates?
In early January 2026, President Donald Trump posted on social media that he was calling for a 10% cap on credit card interest rates for one year, effective January 20, 2026. However it would take an act of Congress to make this rate cap a reality.
What is the cap on credit card interest?
There is currently no cap on credit card interest, with one exception: Credit card interest rates are capped at 36% for active-duty military service members and their covered dependents under the Military Lending Act.
What is the maximum interest rate allowed on a credit card?
Technically, there is no maximum allowable interest rate for credit cards. A 10% Credit Card Interest Rate Cap Act was introduced in Congress by Sen. Bernie Sanders (I-VT) in early 2025 and cosponsored by Sen. John Hawley (R-MO), but this act has not yet made it out of committee. President Trump proposed a 10% cap on social media in early 2026, but thus far banks and other credit card issuers have resisted a ceiling.
What would 10% credit card rate cap mean for your wallet?
Research from Vanderbilt University suggests that a credit card interest cap of 10% would save consumers $100 billion in costs annually. It could mean that credit card rewards, particularly those to consumers with lower credit scores, would decline, but most customers would save more than they would lose in rewards. It remains to be seen, however, whether there would be downstream effects in other areas of the economy, such as increased merchant fees and/or increased costs that would be covered by consumers.
Is there going to be a cap on credit card interest rates?
Although capping interest rates on credit cards has been proposed by both President Trump and senators on both sides of the aisle, there is no definite change to credit card interest rates at present.
What does Trump’s credit card cap mean?
President Trump proposed a credit card interest rate cap of 10% in a social media post in January 2026, however at this time it is simply a proposal. An act of Congress would be required to get a mandatory rate cap off the ground.
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