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.
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Key Points
• President Trump proposed a 10% cap on credit card interest for one year starting January 20, 2026, to address high interest rates.
• The cap could lower credit card APRs, allowing borrowers to save money on interest and potentially pay off debt faster.
• Financial institutions warn that a 10% cap could lead to reduced credit availability and lower credit limits, particularly for borrowers with lower credit scores.
• Credit card rewards could decline by up to $27 billion for borrowers with FICO® scores of 760 and lower, though interest savings would outweigh losses.
• Banking groups caution that reduced credit card access might drive consumers toward less regulated, more costly lending alternatives.
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.
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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.
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Pros:
• Saving money: By paying off your credit card balance at a lower interest rate, you could potentially save a significant amount of interest monthly and overall — especially if your current interest rate is high (see below for an example of how this might work).
• Faster debt payoff: With a lower interest rate, the amount of interest you owe each month and in total is reduced, which could help you erase your credit card debt sooner.
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Cons:
• Limited credit card availability: Financial professionals, banks, and other lenders say that a 10% cap on credit card rates would cost them money. As a result, they would have to cut back on the credit cards they offer and reduce credit card limits, especially to borrowers with lower credit scores.
• Fewer credit card rewards: A 10% interest rate cap could result in up to $27 billion in lost credit card rewards for borrowers with FICO scores of 760 and lower, according to the 2025 report from Vanderbilt University. However, the report noted that the money consumers would save on interest outweighed the loss of rewards.
• Riskier lending options: Some banking groups released a statement saying that because the 10% interest rate cap would reduce credit card access, it would “drive consumers toward less regulated, more costly alternatives.” Such alternatives might include payday lenders.
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.
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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.
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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
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