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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.

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.

Recommended: Fixed vs. Variable Interest Rate Credit Cards

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.

Recommended: Personal Loan vs. Credit Card

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.

Photo credit: iStock/Drs Producoes

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q126-019

Credit card interest rates remain some of the highest in consumer finance, with national rates hovering around 22%. For borrowers with limited or damaged credit, rates can climb to 30% or even higher. At these levels, the snowball effect of daily compounding can make debt feel overwhelming and seemingly impossible to pay off — especially for consumers making only minimum payments.

This reality has fueled renewed debate around the idea of a credit card interest cap — a legal limit on how high credit card interest rates can go. On January 9, 2026, President Donald Trump proposed capping credit card interest rates at 10% for one year, prompting questions about how such a cap would function, who it would help, and what trade-offs it might involve.

What follows is a closer look at what a credit card interest cap is, how it works, existing limits, and the potential implications of imposing one in the U.S.

What Is an Interest Cap for a Credit Card?

An interest cap on credit cards is a regulatory limit that sets the highest allowable annual percentage rate (APR) a lender may charge borrowers. This restricts how expensive revolving credit can become, regardless of market conditions or a borrower’s individual risk profile.

Credit card rate caps are typically intended to prevent usury — the practice of charging excessively high interest rates — and to provide relief for borrowers carrying high-interest debt. Rate caps already exist in limited circumstances, such as at the federal level for military service members and for certain financial institutions.

An interest rate cap does not eliminate interest altogether. Instead it ensures rates remain below a predefined threshold.

💡 Quick Tip: A low-interest personal loan can consolidate your debts, lower your monthly payments, and help you get out of debt sooner.

How Does a Credit Card Interest Cap Work?

A credit card interest cap works by setting a maximum APR that issuers cannot exceed. If the cap is set at 15%, for example, no credit card — regardless of market conditions or borrower qualifications — could legally charge more than 15% interest on outstanding balances.

Implementation typically involves:

•   Legislative action: Congress or state legislatures pass laws defining the cap.

•   Regulatory oversight: Agencies monitor compliance and penalize violations.

•   Market adjustment: Issuers revise pricing models, eligibility criteria, and rewards structures.

By lowering the APR, a cap reduces the portion of a borrower’s monthly payment that goes toward interest, allowing more of the payment to be applied to the principal balance. This can help borrowers pay off debt faster.

However, credit card issuers generally price interest rates based on borrower risk, funding costs, expected defaults, and profitability. When a cap limits interest income, lenders may respond by:

•   Tightening approval standards

•   Reducing credit limits

•   Eliminating low-interest promotional offers

•   Increasing fees or annual charges

What Is the Current Cap on Credit Card Interest?

There is currently no general national credit card interest rate cap for all consumers. However, several specific legal caps are in place:

•   Federal credit unions: U.S. law states that federal credit unions cannot charge their members a rate higher than 18%, including all finance charges, on their unpaid balances.

•   Military personnel: The Military Lending Act caps interest at 36% for active-duty members and their covered dependents. The Servicemembers Civil Relief Act further reduces interest rates to 6% on debt incurred before entering active duty.

•   State level: Some states have usury laws that limit rates on certain types of loans, including credit cards. However, many issuers avoid these limits by basing their operations in states where the rate limits are high or unlimited (such as Delaware or South Dakota).

•   One-year protection from rate hikes: Under the Credit Card Accountability Responsibility and Disclosure Act, issuers cannot raise interest rates during the first year an account is open. After that, issuers must provide 45 days’ notice before increasing rates. Exceptions apply, such as expiration of a 0% introductory APR or if a payment is more than 60 days late.

Pros and Cons of a Credit Card Interest Cap

Like many financial regulations, credit card interest caps come with both benefits and trade-offs.

💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

Why Is the Trump Credit Card Interest Cap Being Proposed?

On January 9, 2026, President Donald Trump announced on his social media platform Truth Social that he will impose a one-year cap on credit card interest rates at 10%, effective January 20. He cited affordability concerns and criticized rates ranging from 20% to 30% during the previous administration. The proposal echoes his 2024 campaign pledge to cap credit card interest rates at 10%.

The idea of a federal credit card interest cap is not new. In February 2025, a bipartisan bill introduced by Sens. Josh Hawley of Missouri and Bernie Sanders of Vermont proposed capping card APRs at 10% for five years. That bill is currently stalled in Congress.

Recent rate-cap proposals are generally framed as a way to provide immediate financial relief after years of rising interest rates. They also carry political appeal as a clear, easy-to-understand consumer protection measure.

Pros and Cons of the Trump Credit Card Interest Cap

Trump’s specific proposal — a one-year 10% cap on credit card interest — has generated significant debate. Here’s a look at potential benefits and drawbacks of his proposal:

Example Scenarios

To understand how a credit card interest cap might play out in practical terms, consider the following examples.

Scenario 1: Average Borrower

Suppose you have a credit card balance of $6,500 — roughly the average among Americans with credit card debt — with a 22% APR. If the rate cap is implemented, that rate would drop to 10% for one year.

Under a 10% cap, your annual interest cost would drop from about $1,430 to $650, adding up to $780 in interest savings alone.

Scenario 2: Consumer Actively Paying Down Debt

With a $6,500 balance at 22% APR, you would have to make monthly payments of at least $608 to pay off the balance within one year. At a 10% APR, you could pay off the same balance with monthly payments of about $571. Over the year, you would save roughly $443 in interest.

Scenario 3: Consumer Who Usually Pays in Full

If you pay off your balance in full every month and rarely incur interest, the 10% cap would provide no direct benefit. However, you might be indirectly affected. Reward rates might decline, or a previously no-fee card might introduce an annual fee. While you would not save on interest, you could still bear some of the costs issuers shift elsewhere to offset capped rates.

The Takeaway

A credit card interest cap is a powerful but blunt policy tool. It offers significant protection against excessive borrowing costs and could help millions of Americans escape high-interest debt cycles. At the same time, it could reduce access to credit, reshape card benefits, and push some borrowers toward riskier financial alternatives.

The renewed attention generated by Trump’s proposal and similar efforts reflects growing dissatisfaction with current credit card pricing. Whether or not a federal interest cap is enacted, the debate raises a larger question: how to balance consumer protection with a functional and inclusive credit market.

For consumers, understanding how interest rates and potential caps work — and their possible consequences — can support smarter borrowing decisions, regardless of how future policy unfolds.

Credit cards have an average APR of 20%–25%, and your balance can sit for years with almost no principal reduction. Personal loan interest rates average 12%, with a guaranteed payoff date in 2 to 7 years. If you’re carrying a balance of $5,000 or more on a high-interest credit card, consider a SoFi Personal Loan instead. See your rate in minutes.

FAQ

Why is capping credit card interest bad?

While capping credit card interest provides immediate relief to consumers, opponents argue it can negatively affect the credit market. Primary concerns include reduced access to credit for high-risk borrowers, as lenders may deny applications if they can’t charge a rate that justifies the risk of default. Issuers may also offset lost revenue by increasing fees (like annual or late fees) or reducing valuable card perks such as rewards and cash-back programs, ultimately impacting all consumers.

What is the cap on credit card interest?

The U.S. currently has no universal federal cap on credit card interest rates. However, specific limits are in place: Federal credit unions are generally capped at 18%, and the Servicemembers Civil Relief Act limits credit card rates for active-duty service members to 6% on debt incurred before entering military service. While some states enforce rate caps, many major card issuers operate from states with very high or no caps, allowing APRs well above 20%.

How does an interest cap work?

An interest cap is a legal maximum annual percentage rate (APR) lenders can charge. If a cap exists, credit card issuers must price cards at or below that rate. Caps are meant to protect consumers from excessive interest but can also reduce credit availability if lenders see capped rates as unprofitable.

Who sets credit card interest caps?

Interest caps are set by governments, usually at the state level in the U.S. through usury laws. Congress could impose a federal cap, but has yet to do so. Because lenders are permitted to “export” rates from their home state, they frequently base their operations in jurisdictions with high interest limits or no caps at all.

Is 22% interest high on a credit card?

The national average credit card interest rate is currently around 22%, according to the Federal Reserve. That means a 22% APR is considered typical for the current market. However, for consumers carrying a balance, 22% is a high rate that significantly increases the cost of debt and makes it harder to pay off. Rates for borrowers with excellent credit may be lower, while those with weaker credit can face rates as high as 30%.

What does Trump’s credit card cap mean?

President Trump has proposed a temporary 10% cap on credit card interest rates, effective January 20, 2026, to combat high borrowing costs. While the plan could save Americans an estimated $100 billion annually, it faces significant hurdles. Legal experts note that a president cannot mandate interest caps via executive order; implementation requires an act of Congress. The banking industry also warns that a rigid 10% ceiling would likely force lenders to cancel accounts for high-risk and subprime borrowers, as they could no longer price for the risk of default.

Photo credit: iStock/andreswd

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SOPL-Q126-018

On January 9, 2026, President Trump announced on social media that he is calling for a one-year 10% credit card interest cap to help address high interest rates and make credit more affordable for consumers.

With Americans carrying a record $1.233 trillion of credit card debt, and the average credit card interest rate at 23.79%, the Trump credit card interest cap has generated a lot of attention. It’s also created a lot of debate. While the cap could reduce the cost of borrowing for many consumers and save them money, it may also make credit less available for those who need it most, according to bankers and financial analysts.

In this guide, we dig into the proposed 10% credit card cap to find out how it might work, and the way it may affect consumers, including the potential benefits and drawbacks. Here’s what you need to know about the Trump credit card interest cap and what it could mean for your finances.

What Is the Proposed Trump Credit Card Interest Cap?

President Trump has called for a cap of 10% on credit card interest for one year, beginning on January 20, 2026. That’s far below the average credit card APR (annual percentage rate), which is hovering above 23%.

However, the President does not have the authorization to mandate credit card interest caps on his own — typically, a bill would need to be passed in Congress for such a cap to take effect. While Trump could issue an executive order for the 10% interest rate cap, it’s uncertain whether it would be enforceable. Under the 2010 Dodd Frank Act, which introduced sweeping financial regulations, the Consumer Financial Protection Bureau is prohibited from setting interest rate caps without legislation from Congress.

Notably, there is some bipartisan support in Congress to cap credit card rates at 10%, including a bill in the Senate that was introduced in 2025 by Senators Bernie Sanders (I-VT) and Josh Hawley (R-MO).

How Does the Trump Credit Card Interest Cap Work?

Specific details about the Trump credit card interest cap have not yet been released, but theoretically, it might work something like this: Credit card issuers would not be able to charge more than 10% interest on credit cards for one year, starting on January 20. It’s not clear whether the 10% rate would apply to existing credit card accounts or only to accounts opened after the cap goes into effect.

If Trump’s interest rate cap does apply to existing credit card accounts, it would lower APR on credit cards and possibly allow borrowers to pay off their debt faster, and at a lower rate, which could save them money.

Why Is the Trump Credit Card Interest Cap Being Proposed?

The 10% cap is a way to potentially lower credit card debt. It’s also a means of addressing affordability, which 80% of Americans have indicated is a key concern, according to at least one survey.

Forty-six percent of adult credit card holders carry credit card debt, and many struggle to pay it off. Credit card interest rates have been rising over the past 20 years, adding to the cost burden for consumers.

The average credit card interest rate in the U.S. is 23.79% as of January 2026. If the rate was lowered to 10%, consumers could save $100 billion a year, or almost $900 in interest per person, a 2025 report from researchers at Vanderbilt University found.

For those looking for ways to become debt-free, a lower credit card interest rate could be a helpful starting point.

Recommended: Cash-Back vs. Low-Interest Credit Cards

Pros and Cons of the Trump Credit Card Interest Cap

The 10% interest rate cap proposed by President Trump could provide certain benefits to consumers, but it also has potential drawbacks, according to financial professionals. These are some of the advantages and disadvantages to be aware of.

Example Scenario of the Trump Credit Card Interest Cap

If the 10% credit card cap is enacted, here is an example of how it might impact what borrowers owe.

Let’s say an individual has a credit card balance of $5,000 and an interest rate of 20%. That means they are charged $82.85 in interest per month. If they make payments of $100 monthly, it would take them more than nine years to pay off their debt, and during that time they would pay $5,840 in interest — which is more than their principal balance.

However, if their credit card interest rate was capped at 10%, they would be charged $41.26 in interest per month, pay off their debt in just under five-and-a-half years, and pay just $1,494 in total interest.

As you can see, dropping the interest rate could potentially save consumers a lot of money. But again, it’s not known whether the credit card interest rate cap will apply to existing accounts. In addition, the proposed 10% cap is for one year, according to President Trump. In the above scenario, a 10% interest rate for one year on a balance of $5,000 would save a borrower $495 in interest over the course of that year.

Recommended: Credit Card Promotional Interest Rates

Strategies for Paying Off Credit Card Debt

Whether or not Trump’s 10% cap on credit card interest rates happens, there are techniques you can use right now to help get out from under credit card debt. These are some methods to consider.

•  Pay more than the minimum. When you pay only the minimum amount due each month, interest that accrues on the credit card balance rolls over from one month to the next. If the interest compounds, which is often the case, it’s added to your balance, meaning you end up paying interest on the balance and the interest. One way of avoiding interest on credit cards is to pay off your balance in full each month if you can.

•  Request a lower rate. If you’ve been using credit cards responsibly and your credit is solid, you may be able to get a lower interest rate by calling your issuer and asking for a better rate.

•  Know how your interest rate works. Credit cards may have fixed or variable interest rates. Fixed rates remain the same over time, while variable rates fluctuate based on certain economic indexes. Variable interest rates carry more risk than fixed — the rates can go up, which means your payments rise. Of course, they can also go down, which would lower your payments.

When it comes to choosing fixed vs. variable interest rate credit cards, it’s a matter of personal preference. If you prefer the stability of a known thing, a fixed interest rate is likely the better option for you. If you’re comfortable with some risk in return for a possible reward, you might opt for a variable rate.

•  Make extra payments. Instead of making the standard one payment per month, some borrowers use the 15/3 credit card payment method, which involves making two payments monthly. This strategy can help you pay off debt faster, since you’re making extra payments. It can also lower your credit utilization ratio, which can help a borrower build their credit score.

•  Consolidate debt with a personal loan. How debt consolidation works is that you combine your existing debt into one new loan and use the new loan, which has a fixed interest rate, to pay off your debt.

Consolidating credit card debt by taking out a personal loan could potentially help borrowers get a lower interest rate. The average interest rate for a personal loan for a borrower with good credit is 14.48%, while the average credit card interest rate is 23.79%, as noted above. The lower rate could help you pay down your debt sooner and pay less in total interest.

Recommended: Personal Loan vs. Credit Card

The Takeaway

President Trump’s proposal to cap credit card interest rates at 10% could help borrowers save money on interest and potentially pay off debt faster. But banks and financial analysts warn there might be unintended consequences, such as limiting credit card availability. For now, it’s uncertain whether the proposed rate cap will be enacted without legislation passed by Congress.

In the meantime, there are a number of ways to tackle credit card debt, including paying more than the minimum balance due, making extra payments, requesting a lower rate from your lender, or consolidating debt with a personal loan. Exploring the options and putting a plan in place can help borrowers take charge of their money.

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?

Yes, President Trump is trying to reduce credit card rates. On January 9, 2026, he took to social media to call for a 10% cap on credit card interest rates for one year, starting on January 20. It is not yet clear if his proposed interest rate cap will happen.

What is the cap on credit card interest?

Currently, there is no federal cap on general credit card interest rates. Rates are set by lenders based on such factors as a benchmark rate called the Prime Rate, and a borrower’s creditworthiness. That said, there are a couple of exceptions: Active military service members and their dependents have their credit card interest rates capped at 36%, and federal credit union members have their rates capped at 18%.

President Trump has proposed a one-year 10% cap on credit card interest rates to begin on January 20, 2026. It’s not yet known whether his proposal will take effect.

What is the maximum interest rate allowed on a credit card?

Generally speaking, there is no federal interest rate cap on credit cards, and no such thing as a maximum interest rate allowed. However, rates are capped for active military service members and their dependents at 36% under the Military Lending Act. In addition, federal credit unions must cap their rates at 18% for their members.

Is 30% interest rate legal?

Yes, 30% interest rates are legal for credit cards because there is no federal law that sets a cap on these rates. While many states do have interest rate caps, these laws often don’t apply to credit cards, or there may be certain exemptions for the institutions that issue credit cards.

Is there a legal limit on credit card interest?

No, there is no federal law that limits general credit card interest. However, the Military Lending Act sets a 36% interest rate cap for active military service members and their dependents, and there is an 18% interest rate cap for federal credit union members. President Trump has called for a 10% credit card interest rate cap for one year, though it’s not known if it will be enacted.

What does Trump’s credit card cap mean?

Trump’s credit card cap calls for a 10% limit on credit card interest rates for one year, starting on January 20, 2026. So far, his cap is a proposal; it has not been enacted.

Photo credi: iStock/Muhammad Labib Adilah

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q126-017

Margin accounts, which permit qualified investors to trade using borrowed funds, have strict rules about maintaining a minimum amount of cash or securities in the account. The investor could face a margin call if liquid funds drop below that level. In that case, an investor is required to add cash or sell investments to meet the minimum requirement, or the brokerage might do it for them.

Margin trading — which is a form of leverage — is a risky endeavor. Placing bets with borrowed funds may boost gains, but can also amplify losses. Brokers require traders to keep a minimum balance in their margin accounts for this reason.

Margin calls are designed to protect both the brokerage and the client from bigger losses. Here’s a closer look at how margin calls work, as well as how to avoid or cover a margin call.

What Is a Margin Call?

A margin call is when a brokerage firm demands that an investor add cash or equity into their margin account because it has dipped below the required minimum amount. The margin call usually follows a loss in the value of investments bought with borrowed money from a brokerage (known as margin debt).

A house call, sometimes called a maintenance call, is a type of margin call. A brokerage firm will issue the house call when the market value of assets in a trader’s margin account falls below the required maintenance margin — usually 25% of the value of the securities in the account, per Financial Industry Regulatory Authority (FINRA) and New York Stock Exchange (NYSE) rules. This is the minimum amount of equity a trader must hold in their margin account, but a broker may require a higher amount.

If the investor fails to honor the margin call, when trading stocks or other securities, meaning they do not add cash or equity into their account, the brokerage can sell the investor’s assets without notice to cover the shortfall in the account.

A margin account entails a high level of responsibility and potential risk, which is why margin trading is primarily for experienced investors, whether investing online or through a traditional brokerage.

How Do Margin Calls Work?

When the equity in an investor’s margin account falls below the maintenance margin, a brokerage firm will typically issue a margin call. Maintenance margins requirements differ from broker to broker.

Additionally, regulatory bodies like the Federal Reserve and FINRA have rules for account minimums — including the initial margin and the maintenance margin, which are different. These rules exist to limit the risk of loss for investors and brokerages alike.

Regulation T

The Federal Reserve Board’s Regulation T states that the initial margin level should be at least 50% of the purchase price of the securities the investor hopes to trade. For example, a $10,000 trade would require an investor to use $5,000 of their own cash for the transaction.

Recommended: Regulation T (Reg T): All You Need to Know

FINRA

FINRA requires that investors have a maintenance margin level of at least 25% of the market value of all securities in the account after they purchase on margin. For example, in a $10,000 trade, the investor must maintain $2,500 in their margin account. If the investment value dips below $2,500, the investor could be subject to a margin call.

Again, some brokers may impose tighter restrictions on margin accounts. Experienced traders will be sure to note the terms of all margin trades.

Example of Margin Call

Here is how a margin trade works. Suppose an investor wants to buy 200 shares of a stock at $50 each for an investment that totals $10,000. He or she puts up $5,000 in initial margin, while the brokerage firm lends the remaining $5,000.

FINRA rules and the broker then require that the investor hold 25% of the total securities value in his or her account at all times — this is the maintenance margin requirement. So the investor would need to maintain $2,500 in his or her brokerage account. The investor currently achieves this since there’s $5,000 in equity from the initial investment.

If the stock’s value falls to $30 per share, the value of the investment drops to $6,000. The broker is entitled to $5,000 (to repay the margin loan), not including interest or fees, leaving approximately $1,000. That would be below the $1,500 required, or 25% of the total $6,000 value in the account.

That would trigger a margin call of $500, or the difference between the $1,000 left in the account and the $1,500 required to maintain the margin account. Normally, a broker will allow two to five days for the investors to cover the margin call. In addition, the investor would also owe interest and possibly fees on the original loan amount of $5,000.

Margin Call Formula

Here’s how to calculate a margin call:

Margin call amount = (Value of investments multiplied by the percentage margin requirement) minus (Amount of investor equity left in margin account)

Here’s the formula using the hypothetical investor example above:

$500 = ($6000 x 0.25%) – ($1,000)

Investors can also calculate the share price at which he or she would be required to post additional funds.

Margin call price = Initial purchase price times (1– borrowed percentage / 1– margin requirement percentage)

Again, here’s the formula using the hypothetical case above:

$33.33 / share = $50 x (1 – 0.50 / 1 – 0.25)

In other words, the price per share cannot fall below $33.33 or the investor will risk getting a margin call.

2 Steps to Cover a Margin Call

When investors receive a margin call, there are only two options:

1.   They can deposit cash into the margin account so that the level of funds is back above the maintenance margin requirement. Investors can also deposit securities that aren’t margined.

2.   Investors can also sell the securities that are margined in order to meet requirements.

In a worst case scenario, the broker can sell off securities to cover the debt, without notifying the investor.

How Long Do I Have to Cover a Margin Call?

Brokerage firms are not required to give investors a set amount of time. As mentioned in the example above, a brokerage firm normally gives customers two to five days to meet a margin call. However, the time given to provide additional funds can differ from broker to broker.

In addition, during volatile times in the market, which is also when margin calls are more likely to occur, a broker has the right to sell securities in a customer’s trading account shortly after issuing the margin call. Investors won’t have the right to weigh in on the price at which those securities are sold. This means investors may have to settle their accounts by the next trading day.

Tips on Avoiding Margin Calls

The best way to avoid a margin call is to avoid trading on margin or having a margin account. Trading on margin should be reserved for investors with the time and sophistication to monitor their portfolios properly and take on the risk of substantial losses. Investors who trade on margin can do a few things to avoid a margin call.

•   Understand margin trading: Investors can understand how margin trading works and know their broker’s maintenance margin requirements.

•   Track the market: Investors can monitor the volatility of the stock, bond, or whatever security they are investing in to ensure their margin account doesn’t dip below the maintenance margin.

•   Keep extra cash on hand: Investors can set aside money to fulfill the potential margin call and calculate the lowest security price at which their broker might issue a call.

•   Utilize limit orders: Investors can use order types that may help protect them from a margin call, such as a limit order.

The Takeaway

While margin trading allows investors to amplify their purchases in markets, margin calls could result in substantial losses, with the investor paying more than he or she initially invested. Margin calls occur when the level of cash in an investor’s trading account falls below a fixed level required by the brokerage firm.

Investors can then deposit cash or securities to bring the margin account back up to the required value, or they can sell securities in order to raise the cash they need.

If you’re an experienced trader and have the risk tolerance to try out trading on margin, consider enabling a SoFi margin account. With a SoFi margin account, experienced investors can take advantage of more investment opportunities, and potentially increase returns. That said, margin trading is a high-risk endeavor, and using margin loans can amplify losses as well as gains.

FAQ

How can you satisfy your margin call in margin trading?

A trader can satisfy a margin call by depositing cash or securities in their account or selling some securities in the margin account to pay down part of the margin loan.

How are fed and house calls different?

A fed call, or a federal call, occurs when an investor’s margin account does not have enough equity to meet the 50% equity retirement outlined in Regulation T. In contrast, a house call happens when an investor’s margin equity dips below the maintenance margin.

How much time do you have to satisfy a margin call?

It depends on the broker. In some circumstances, a broker will demand that a trader satisfy the margin call immediately. The broker will allow two to five days to meet the margin call at other times.