Major banking associations in the United States have raised serious concerns over a proposal by President Donald Trump to impose a sharp limit on credit card interest rates. The industry warns that such a move could severely restrict access to credit for millions of Americans and small businesses.
The Presidential Proposal and Bank Pushback
On Friday, President Trump announced a significant policy goal via his Truth Social platform. He stated that from January 20, marking the first anniversary of his administration, he intends to enforce a 10 per cent cap on credit card interest rates. He argued that Americans are being "ripped off" by issuers who currently charge rates between 20 to 30 per cent or even higher.
In a swift and unified response, five leading banking industry groups issued a joint statement late on Friday. While expressing a shared desire to make credit more affordable, they strongly cautioned against the proposed cap. "Evidence shows that a 10 per cent interest rate cap would reduce credit availability and be devastating for millions of American families and small business owners who rely on and value their credit cards," the associations stated.
Potential Consequences for Consumers and the Market
The banking groups, which include the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and the Independent Community Bankers of America, highlighted a critical risk. They warned that such a regulation could unintentionally push consumers towards "less regulated, more costly alternatives" for borrowing, potentially putting them in a worse financial position.
This debate unfolds against a backdrop of soaring consumer reliance on credit cards. According to Federal Reserve data, total outstanding credit card debt in the US surpassed $1.23 trillion by the end of September. This makes it the fourth-largest category of household debt, trailing only mortgages, student loans, and auto loans. The Fed also reports that current credit card interest rates average 21 per cent or higher, with rates for higher-risk borrowers reaching up to 38 per cent—a sharp increase from the average of about 12 per cent seen a decade ago.
Political Context and Reactions
With crucial midterm elections scheduled for November, President Trump faces mounting pressure to deliver on promises aimed at lowering the cost of living. Persistent inflation and growing consumer financial stress have made this a key issue for voters.
However, the proposal has also drawn scepticism from political opponents. Prominent Democrat Senator Elizabeth Warren, who chairs the Senate Banking Committee, questioned the president's commitment. She pointed to his administration's past efforts to weaken the Consumer Financial Protection Bureau, a key watchdog agency. "Begging credit card companies to play nice is a joke," Warren said in a statement. "Trump doesn't care about affordability."
The outcome of this proposal remains uncertain, but it has ignited a crucial debate about consumer protection, credit access, and the role of regulation in the vast US financial marketplace.
