Donald Trump has issued a stark ultimatum to the banking industry, announcing a mandatory 10% cap on credit card interest rates starting January 20. In a post on Truth Social, the former president declared that the era of “ripping off” the American public is over. He cited current interest rates of 20% to 30% as unacceptable, explicitly blaming the policies of the Biden administration for the financial strain facing millions of households.
This announcement lands in the middle of a historic debt crisis. Credit card balances in the U.S. have swelled to $1.17 trillion, a record high that has economists worried about consumer stability. Trump’s proposal aims to slash the cost of this debt significantly, offering a lifeline to borrowers struggling to make minimum payments. The sheer scale of the proposed reduction—cutting rates by half or more for many consumers—marks a radical departure from traditional Republican financial policy.
However, the banking sector has reacted with alarm. Leading industry associations issued a joint statement warning that the cap would break the mechanics of modern lending. They explained that interest rates are used to price risk; if banks are forced to cap rates at 10%, they simply cannot afford to lend to borrowers with lower credit scores. The result, they argued, would be a massive contraction in credit availability, hurting the very people Trump intends to protect.
Senator Elizabeth Warren added her voice to the opposition, focusing on the legal and practical hurdles. She dismissed the announcement as a “joke” if it relies solely on the president’s word without Congressional legislation. Warren pointed out that Trump has a history of deregulating the financial industry, making this sudden pivot to strict market intervention seem inconsistent. She challenged him to support actual legislation rather than issuing social media decrees.
Investor Bill Ackman also weighed in, predicting dire consequences for the market. He warned that credit card companies would likely cancel millions of active cards to avoid operating at a loss. According to Ackman, the math simply doesn’t work for subprime borrowers at a 10% rate, meaning those who need credit the most could find themselves cut off entirely.