Trump’s 10% credit card rate cap | Who benefits, who loses

The US President, Donald Trump, has proposed a one-year cap of 10% on credit card interest rates — a move that could significantly affect both consumers and banks if it becomes law.Millions of Americans rely on credit cards to manage everyday expenses. For many of them, this comes at a high cost, as credit card interest rates in the US often exceed 20%. Trump’s proposal aims to limit these rates to 10% for a year, offering relief to people who carry unpaid balances on their cards. However, it is important to note that this is only a proposal at this stage. Any nationwide cap would require approval from the US Congress before it could be implemented.
Credit cards are deeply embedded in the American financial system. About 74% of adults in the US have at least one credit card, and the average person holds three to four cards. There are more than 60 million active credit card accounts across the country. At the same time, Americans are carrying record levels of credit card debt, which currently stands at around $1.2 trillion.
In 2024 alone, consumers paid roughly $160 billion in credit card interest. For people who do not clear their full bill every month, a 10% interest cap could lead to meaningful savings — potentially reducing interest costs by tens of billions of dollars across the economy.

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The impact on banks, however, would be significant. According to Federal Reserve data, the average US credit card annual percentage rate (APR) is between 22% and 24%. The average revolving balance — the amount that customers carry forward — is about $5,500 to $6,000. At a 22% APR, banks earn roughly $1,300 per customer each year in interest. Under a 10% cap, that figure would fall to around $600, meaning banks would lose more than half their interest income per customer.When scaled up, the impact becomes even larger. A major card issuer with 10 million customers who carry balances could see annual interest income fall by as much as $7 billion. This is one of the key reasons why the proposal has faced strong opposition from banks and financial institutions in the US.

The proposal has also raised questions about whether something similar could happen in India. In India, credit card interest rates are much higher, often ranging between 36% and 48% annually, depending on the lender. While the Reserve Bank of India can influence lending rates indirectly, imposing a flat interest rate cap of 10% would be unprecedented. Such a move would almost certainly require legislative backing, extensive consultation with banks, and would face strong resistance from the financial sector.

Also Read: Donald Trump calls for one-year cap on credit card interest rates at 10%: Key points explained

For now, Trump’s proposal serves as a signal of rising political focus on household debt and consumer costs in the US — but whether it turns into actual policy remains to be seen.

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