Credit card issuers make money in three primary ways — through interchange fees, through interest charges, and through annual fees. Along those lines, President Trump is suggesting he’s going to be majorly regulating this, and it could have implications for consumers, both positive and negative.
I first covered this yesterday, but would like to provide an update, as there were questions as to whether this was simply a “suggestion” from Trump, or actually a legal requirement. Well, it seems he’s actually serious, or something.
Trump calls on one year cap on credit card interest rates
On the night of Friday, January 9, 2026, Trump took to his Truth Social platform to suggest that credit card companies should cap their interest rates at 10% as of January 20, 2026, for a period of one year. Here’s the text of what he wrote:
Please be informed that we will no longer let the American Public be “ripped off” by Credit Card Companies that are charging Interest Rates of 20 to 30%, and even more, which festered unimpeded during the Sleepy Joe Biden Administration. AFFORDABILITY! Effective January 20, 2026, I, as President of the United States, am calling for a one year cap on Credit Card Interest Rates of 10%. Coincidentally, the January 20th date will coincide with the one year anniversary of the historic and very successful Trump Administration. Thank you for your attention to this matter. MAKE AMERICA GREAT AGAIN! PRESIDENT DONALD J. TRUMP
Based on this post, it wasn’t entirely clear if he plans to enforce this through some sort of executive action, or if he’s simply trying to pressure credit card companies into voluntarily complying. The way he suggests he’s “calling for” credit card companies to do this suggests that maybe the latter is the case.
However, on Sunday, January 11, 2026, Trump was asked about this on Air Force One, and he claimed that credit card companies would be “in violation of the law” if they don’t comply with his orders. We’ll see if that actually ends up being the case, but that’s more serious than simply “calling for” something.
For context, credit cards are known for often having high interest rates, which are currently an average of over 20%. These are the charges that apply if you don’t pay your full balance before the payment due date. You don’t pay interest charges if you simply charge your purchase to a credit card, and then pay your balance in full.
My take on Trump’s credit card interest rate cap
The concept of capping credit card interest rates is something that generally has bipartisan support, so I don’t think this is any radical concept. Now, I am a little confused about if there’s actually an enforcement mechanism here, because that seems like an important detail. Trump claims companies will be in violation of the law if they don’t comply, but are Truth Social posts now a form of official lawmaking, or…?
If you are going to institute something like this, what strikes me as completely ridiculous is that this will only be rolled out for a year. If it’s a good policy, wouldn’t it make sense longer term than that? By having it only apply for one year, it seems like it creates huge uncertainty in the market, but then again, that’s not something that Trump shies away from.
Two things come to mind about this short timeline. First, certainly not coincidentally, the timeline coincides with the midterm elections. Second, and I think this is a very important point — this will be a financial disaster for people that will put them in massive debt. Can you imagine how many people will build up huge credit card debt when they’re “only” paying 10%, to then end up paying 25-30% interest rates a year later, with huge balances?
A cap on credit card interest rates would be good news for some people who finance credit card charges, since they’d be paying a lot less in interest.
That being said, I wouldn’t even say it’s good for everyone financing charges — there’s no denying that if interest rates were capped at 10%, lots of consumers with not-great credit would be locked out of getting credit cards, and might even have their accounts closed, because card issuers would find it too risky to loan them money at that rate. After all, there’s a huge risk to people not making payments, and the economics of that work differently with 10% interest rates rather than 25%+ interest rates.
Beyond that, if we did see a long term cap on credit card interest rates, it would completely change the credit card landscape in terms of how rewarding cards are, with everything ranging from welcome bonuses, to rewards on spending, to perks.
Right or wrong, credit card economics are heavily reliant on a cross-subsidized system. That’s the whole reason some of us are able to get such outsized value. Credit card rewards structures nowadays largely more or less rebate back interchange fees to consumers, as it’s easy to earn 2% cash back with cards, or even to earn huge multipliers on spending.
The reality is that the revenue that subsidizes a lot of rewards is the interest charges, since that’s the highest margin revenue stream from many card issuers. So we’re partly earning huge welcome bonuses and 5x points on some transactions because someone else is paying close to 30% interest.
I’m not saying that’s a good system, but I’m just being realistic about how it works. If interest rates are forced to be slashed by more than half in the long run, it will have major implications for rewards. Maybe that’s objectively not a bad thing, but it will happen.
For that matter, it would even have a major impact on airlines — they’re so reliant on credit card revenue nowadays to turn profits, and this would greatly hurt their margins in that area as well.
Bottom line
President Trump is telling credit card companies to cap interest charges at 10% for a period of one year, starting January 20, 2026. He claims that if credit card companies don’t comply, they’ll be violating the law. Currently, credit cards charge an average of over 20% interest, so this would majorly slash interest charges.
For those with great credit who are financing credit card charges, this would of course be great news (unless they take out a lot more debt, with no plan to repay it in the next year). Meanwhile for those with less great credit (who are higher risk for card issuers), don’t be surprised if this leads to them no longer being extended credit, and having their accounts shut down.
For that matter, this would without a doubt be bad for credit card rewards, since these interest charges are largely funding the lucrative card benefits we see nowadays, from lounges, to spending multipliers, to big welcome bonuses.
How do you see this credit card interest rate cap playing out?
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