Trump Call For 10% Credit Card Cap Prompts Pushback

Proposal highlights affordability goals but faces steep legal hurdles.
By Marc Rapport, Contributing Editor

President Donald Trump’s call for a 10% cap on credit card interest rates is not a new idea, but it has rarely been delivered with this kind of presidential urgency or political theater.

Trump announced Jan. 9 that he wants a one-year cap on credit card APRs starting Jan. 20, arguing that consumers are being “ripped off” by rates that routinely exceed 20%.
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A study from Vanderbilt University says such a cap would save consumers $100 billion (and result in a $27 billion drop in rewards for cardholders with credit scores of 760 or below.) It also has prompted warnings of sharply diminished access to credit for those who need it most.
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Trump framed the idea as part of a broader affordability push aimed at working families and is reviving a concept that has circulated for years among consumer advocates and a smattering of lawmakers from both parties.

Different this time is the source and the timing. Trump’s announcement immediately raised questions about whether such a cap could be imposed by executive order (many argue it can’t), whether legislation would be required (the consensus is yes), and whether Congress has any appetite for taking on the financial services industry.

It also produced unusual political alignments, with progressive Sen. Elizabeth Warren (D-Mass.) saying the conservative Republican president called her to discuss the issue.

“He says he wanted to work on that, I says, ‘Great, let’s get something done,’”  Warren, the Senate Banking Committee ranking member, says in an appearance on CNBC’s “Squawk Box.”

An Affordability Message With Familiar Roots
In another alignment from far across the aisle, Trump’s call for a cap follows legislation introduced last year by socialist Sen. Bernie Sanders (D-Vermont) and conservative Sen. Josh Hawley (R-Missouri) that would cap credit card APRs at 10%.
That bill did not advance, but Trump’s bully pulpit bid has given the concept renewed visibility as he seeks to emphasize pocketbook issues early in his second term.

The president and others have called for the cap in the past and he argues that high credit card rates disproportionately hurt households already struggling with inflation and higher living costs.

He has also suggested that card issuers could face legal consequences if they fail to comply with his request, although it’s not clear that an enforcement mechanism currently exists.

Legislation Would Be Needed, Not Executive Orders
Despite the attention, legal experts say a 10% credit card rate cap cannot be imposed by the White House. Interest rates on private credit products are governed by a mix of federal statutes and state usury laws, leaving little room for executive action absent explicit authority from Congress.

Agencies such as the Consumer Financial Protection Bureau can regulate disclosures and certain practices, but they cannot impose a nationwide APR ceiling on their own. Any attempt to do so by executive order would almost certainly be challenged and quickly blocked in court, according to multiple legal analysts.

As a result, Congress would need to pass legislation establishing a maximum credit card APR and granting regulators authority to enforce it. Until lawmakers act, Trump’s announcement amounts to political advocacy rather than binding policy, regardless of how forcefully it is delivered.

Industry Warnings About Credit Access
Financial institutions and trade groups have responded swiftly, warning that a flat 10% cap would dramatically shrink access to credit, especially for higher-risk borrowers. From their perspective, risk-based pricing is essential to sustaining unsecured lending at scale.

Richard Hunt, executive chairman of the Electronic Payments Coalition, says his group’s analysis shows that between 82% and 88% of cardholders could see their accounts closed or limits sharply reduced.

“I understand the president is trying to make sure Americans can afford to make ends meet, and we support that,” Hunt says in a Fox Business News article. “But this study is to show them the draconian effects that would happen to his voters and to the Senate and House members’ constituents. This is serious stuff.”

Opponents also argue that limiting credit card access could push vulnerable consumers toward more expensive alternatives, undermining the stated affordability goal. Even if a cap became law, they say, legal challenges would be inevitable.

Credit Unions See and Share Concerns
On the ground, credit union leaders say the impact of a 10% cap would vary widely depending on business models, portfolios, and existing rate limits. Still, many share concerns about new hardships for the very consumers such a cap would aim to help.

David Germann, chief lending officer at $3 billion, 212,000-member Achieva Credit Union in Dunedin, Fla., told CU Broadcast that “Credit unions like Achieva already prioritize affordability. It’s part of our DNA. We offer competitive rates, fewer fees, and lending decisions tailored to each member’s situation.”

That says, he added, “A rigid 10% rate cap, however, could unintentionally limit access to credit for members who need it most, particularly those rebuilding or establishing credit. When we lose the ability to price responsibly based on risk, fewer members may qualify for credit cards at all. That’s not something credit unions want. Our goal is always to keep safe, affordable credit within reach, not push members toward higher-cost alternatives.”

Jeff Carpenter, CEO of $1.5 billion, 68,000-member WEOKIE Federal Credit Union in Oklahoma City, says a flat cap would undercut risk-based lending and ultimately restrict access. “Eventually those that most need access to this form of credit will be cut off,” Carpenter told CU Today, adding that he opposes government-set pricing for financial products.

At $747 million, 56,000-member SeaComm Federal Credit Union in Massena, N.Y., President/CEO Scott Wilson says a cap could trigger tighter underwriting, fewer rewards, or new fees to offset lost interest income.

“I’m concerned there will be a tightening of underwriting that would preclude certain borrowers’ access,” Wilson also told CU Today, noting his institution would reevaluate its card portfolio to preserve member access if the cap were to occur.

America’s Credit Unions: Unintended Consequences
America’s Credit Unions has formally opposed a 10% cap, citing data it says illustrates broad economic fallout. The trade group points to Federal Reserve research showing that 37% of Americans would struggle to cover a $400 emergency expense, with more than 40% of those households relying on credit cards to bridge the gap.

ACU President/CEO Jim Simpson warns of “unintended consequences,” noting that a 10% interest cap could cut roughly 47 million subprime borrowers off from mainstream cards.

“The bottom line is that credit unions have a proven track record of offering affordable financial services to their 145 million members,” Simpson wrote in a Jan. 13 statement. “With these facts, we are firmly opposed to any effort to create an arbitrary rate cap of 10% on credit cards that millions of people rely on to make ends meet.”

The trade group says it will continue engaging the administration and Congress, emphasizing cooperative finance as a way to balance affordability with sustainable access to credit.

Lots of Resistance and Questions. A Disruptor Steps Up
Trump’s announcement has perhaps reshaped the debate but for now, not the law. Without legislation and a resolution in the court battles likely to come, the 10% cap may well remain a talking point rather than policy, one that highlights the tension between affordability ambitions and the realities of consumer credit markets.

Even with Trump’s considerable political heft, the proposal faces stiff resistance and an uncertain path forward amidst intense financial services lobbying – led by the big banks and card issuers.

The competition is not remaining idle. Given their role as disruptors, it’s perhaps not surprising that a fintech – Bilt – has launched new credit card tiers with a 10% APR on purchases for the first year.

The privately held startup, which launched in 2019 and is now valued at a reported more than $10 billion, works with landlords and homeowners to provide rewards to cardholders on rent payments and other routine transactions.

That’s an example of how pricing experiments may emerge regardless of federal action. CBS News reported that Bilt founder Ankur Jain told The Associated Press that his firm’s new credit cards are designed to meet the "bipartisan call for a solution" to the cost-of-living crisis facing many Americans and that if an interest rate cap is imposed, "We'd rather be at the forefront."

But for one credit union executive, it’s all about staying the course.

“The credit union movement exists to serve members, not shareholders, and affordability is already a core focus across the industry. A one-size-fits-all cap could make it harder for credit unions to meet members where they are, particularly during tough financial times,” says Germann at Achieva.

“While the intent may be to help consumers, the reality is that credit unions need flexibility to lend responsibly, especially to members with diverse financial needs. Preserving that flexibility helps us keep credit accessible, transparent, and fair,” the veteran lender says.

Marc Rapport is a longtime credit union trade journalist based in Columbia, S.C.

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