President Donald Trump has declared a one-year cap on credit card interest rates, limiting them to 10%, in a move that has ignited immediate controversy over its legality and economic impact.
Announcement and Implementation Date
In a post on his Truth Social platform, the President stated the restriction would take effect on 20 January 2026, which he noted coincides with the first anniversary of his second inauguration. He framed the action as a corrective measure, accusing credit card firms of having "ripped off" the American public with rates of 20% to 30% during the Biden administration.
However, the announcement, made late on Friday, lacked specific details on how the government would enforce the cap or ensure compliance from financial institutions.
Mounting Debt and Political Pressure
The pledge to cap rates was a feature of Trump's re-election campaign, surfacing as US credit card debt soared to record levels. Official figures show debt climbed from $770 billion in early 2021 to a staggering $1.17 trillion by the third quarter of 2024.
Following perceived inaction on this promise, a bipartisan bill was introduced in February 2025 by Senators Bernie Sanders and Josh Hawley. Their proposed legislation sought to impose a 10% cap for five years, but it has stalled in Congress amid fierce opposition from major banking associations.
Just hours before Trump's announcement, Senator Sanders had publicly criticised the President for failing to deliver on his campaign vow, accusing him of deregulating banks instead.
Swift Backlash from Finance and Politics
The reaction to the President's unilateral move has been sharply divided. Billionaire investor and Trump supporter Bill Ackman initially called it "a mistake," warning it could lead to mass cancellations of credit cards for subprime borrowers as lenders would be unable to price risk adequately. He later softened his tone but maintained his concerns.
Senator Elizabeth Warren expressed profound scepticism, stating, "Begging credit card companies to play nice is a joke." She challenged Trump's sincerity, pointing to his administration's efforts to weaken the Consumer Financial Protection Bureau.
In a unified response, a coalition of powerful banking groups, including the American Bankers Association and the Bank Policy Institute, issued a joint statement. They argued a 10% cap would devastate credit availability, pushing consumers toward riskier, unregulated lenders and harming the very families it aims to help.
Contrasting Support and Uncertain Future
Amid the criticism, Senator Josh Hawley offered enthusiastic support on social media, calling it a "fantastic idea" and pledging his vote. This highlights the unusual political alliances the issue has created.
The central legal question, echoed by numerous critics, is whether the President possesses the executive authority to enact such a sweeping financial regulation without the approval of Congress. As it stands, the announcement sets the stage for a significant legal and political battle, with its implementation on 20 January remaining deeply uncertain.
