Using his signature populist rhetoric, Donald Trump has declared that the American public is being “ripped off” by credit card companies and announced a mandatory 10% interest rate cap. The former president took to Truth Social on Friday night to announce the policy, which is scheduled to take effect on January 20. He specifically targeted the high interest rates of 20% to 30% that have become commonplace, blaming the “Sleepy Joe Biden Administration” for allowing them to persist unchecked.
The announcement comes as a direct response to the escalating consumer debt crisis. With U.S. credit card balances hitting a record $1.17 trillion in the third quarter of 2024, the financial pressure on households is immense. Trump’s proposal aims to cut the cost of borrowing by more than half for many consumers, a move he claims will provide desperate relief to working families struggling to pay their bills.
However, the banking industry has reacted with strong opposition. A coalition of major financial associations, including the American Bankers Association, issued a joint statement warning that the cap would have severe negative consequences. They argued that a 10% rate is insufficient to cover the risk of lending to many consumers, meaning banks would be forced to deny credit to millions of people to avoid losses. The industry predicted that this would drive consumers toward less regulated, more expensive borrowing options.
Senator Elizabeth Warren was also critical, dismissing the announcement as a “joke.” She argued that Trump lacks the legal authority to unilaterally impose such a cap and that his “begging” of companies to lower rates is not a serious policy strategy. Warren pointed to Trump’s history of trying to dismantle the Consumer Financial Protection Bureau as evidence that he is not truly committed to consumer protection.
Despite the criticism from the left and the financial sector, the move has been embraced by some on the right. Senator Josh Hawley called the cap a “fantastic idea,” signaling a shift in Republican economic thinking. As the January 20 implementation date draws near, the conflict between Trump’s populist message and the realities of the financial market is set to escalate.