A proposed 10% annual percentage rate (APR) cap on credit card interest under a potential Trump administration would significantly alter borrowing costs for millions of U.S. consumers. The policy could reduce interest payments for cardholders but may prompt lenders to adjust fees, credit limits, or lending standards.
- Proposed 10% APR cap on credit cards would reduce average annual interest costs by nearly 60%
- Current average credit card APR stands at 24.2%, up from 18.5% in 2020
- JPMorgan Chase, Bank of America, and Capital One control over 70% of the U.S. credit card market
- Credit card lending generates $19 billion in annual revenue for major financial institutions
- Potential lender responses include higher fees, reduced credit limits, and tighter underwriting
- Policy could disproportionately impact consumers with fair or poor credit scores
Under a proposed policy framework advancing in early 2026, former President Donald Trump has advocated for a federal cap limiting credit card interest rates to 10% APR. This would represent a sharp reduction from the current average rate of 24.2% reported by the Federal Reserve, affecting over 80 million Americans with revolving credit balances. The cap applies uniformly across all card issuers, including major banks such as JPMorgan Chase, Bank of America, and Capital One, which collectively manage more than 70% of the U.S. credit card market. The policy aims to alleviate debt burdens, particularly among low- and middle-income borrowers who often carry balances into high-interest cycles. For a cardholder with a $5,000 balance and no new charges, the annual interest under current rates averages $1,210. Under the 10% cap, that cost would drop to $500, a 59% reduction. However, such a cap could pressure lenders’ profit margins, as credit card lending accounts for roughly $19 billion in annual revenue for major financial institutions. In response, banks may react by raising annual fees, lowering credit limits, or tightening eligibility criteria. For instance, current practices of offering cards to applicants with lower credit scores could be scaled back. The shift could disproportionately affect consumers with fair or poor credit, who rely on credit cards for emergency access and cash flow management. Additionally, smaller regional banks and credit unions may struggle to absorb the revenue loss, potentially leading to consolidation or exit from the segment. Market analysts project a near-term dip in credit card loan growth and increased scrutiny from federal regulators on pricing models. The Federal Reserve has not yet signaled support for the cap, but its adoption could trigger a broader debate on consumer protection versus financial institution sustainability. The policy’s implementation would likely be delayed until after 2028 unless enacted through executive action or congressional legislation.