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Earlier this month, President Donald Trump publicly called for credit card interest rates to be capped at just 10% for one year. The national average APR is currently just under 20%.
On the surface, that sounds like a financial win for consumers. But when you dig a little deeper, there are ripple effects to capping interest rates that throw the whole system off balance.
If this 10% rate cap becomes a reality, here are a few things that could likely happen.
1. It will be harder to get approved for a credit card
Capping interest at 10% changes the whole business model.
Credit card issuers make money from two main sources: merchant fees and interest collected from consumers. If the interest revenue stream shrinks in half overnight, banks are likely to respond by tightening their approval standards.
That means folks with fair or limited credit history could get denied for credit cards and instead turn to more expensive options, like payday loans or buy now, pay later plans.
Trump’s proposed rule designed to help borrowers may end up pushing the most vulnerable people into worse situations.
2. Say goodbye to generous credit card rewards
Another cost-cutting measure: If banks are forced to cap the interest they can collect, they’ll likely scale back on the goodies. We will see smaller welcome offers, lower reward rates, and redemption options that just aren’t worth it.
That’s a huge bummer for folks who pay off their cards every month and use rewards to travel, or get cash back (myself included!).
If rewards are your thing, it might be smart to lock in a solid card now — while the programs are still stacked in your favor. You can compare the top-rated 2026 rewards cards here.
3. Smart borrowers can pay off debt faster
For those truly working on paying off their credit card debt, lowering interest rates would give them a tailwind to crush debt faster.
For example, let’s say you’re carrying a $5,000 balance at 20% APR and you drop to 10%. That could mean hundreds in interest savings over a year. And if you keep your payments high, more of that money goes toward the principal.
Better yet, you don’t have to wait for policy changes to save money on interest. Many of today’s top 0% intro APR cards offer no-interest periods for 12, 15, even up to 21 months. You can use them to transfer a balance and crush your debt on your own timeline, starting today.
See the best balance transfer cards in 2026 to help wipe out debt interest-free.
4. Minimum payments would shrink
Most credit card issuers calculate your minimum payment as a flat percentage of your balance (like 1%-3%) plus the monthly interest.
If APRs drop to 10%, the interest portion of that equation shrinks. And given the national average APR today of around 20%, it will be cut in half.
So basically for anyone carrying a balance, the minimum required payment each month would drop drastically.
But…
5. Overspending becomes more tempting
There’s a catch to lowering minimum payments: Since the sting of carrying a balance might not feel as sharp, many people would feel it’s OK to loosen their budget and spend more.
Give an inch, and they’ll take a mile.
I’m not saying everyone will take advantage. But I’ve been in personal finance long enough to see many folks who are given debt relief blessings end up in even worse situations later.
So… will the 10% rate cap actually happen?
Right now, Trump’s 10% interest cap proposal is all talk. Experts say it would likely require Congress to pass new laws, which is far from guaranteed.
We don’t know if this interest rate cap will ever see the light of day. But here’s what we do know: You’re in control of your credit card habits. No matter what happens in Washington, you can stay ahead by choosing the right credit card, paying on time, and keeping interest costs in check.
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All of the above results are terrific.
I agree completely. People need to learn to control there spending habits.
· Why would credit be harder to get? OH, the credit reporting system is askew and sells credit cards.
· Why affect rewards? I earned the rewards, should keep them UNTIL I spend them. Rewards systems might consider rethinking their methods, offers, products, and realize customers are who make them earn money on rewards.
· Minimum payments are one area we could double and not harm anyone. Mine is $27 a month so $54 not so bad.
· Whether this actually is real or fake or goes through or does not go through, whoever is proposing this needs to give us more details and all the fine print, including if this tricky with sticky details or transparent, just lower rates above 10% to 10% and leave all rates under !0% alone? Who knows with articles like this one..
it’s a catch 22 for people who are struggling – that 20% rate can make it painful, or impossible to keep up, much less reduce the principal – which in turn hurts their score, which raises their rates…. capping at a reasonable number is a good idea – and I think 10% is a good number – the banks will still make a lot of money from the fees an interest, but not greed-feeding money.
Every Credit Card should come with 24 Months 0.0% Interest Rate, then Max out at 10% Maximum.
Fees are paid by the retailers, the customers can’t be spending all their cash on interest.
Pull credit down a bit, who needs a $ 35,000 or UNLIMITED Credit Card anyway ?
If you can afford to charge $ 35,000, you don’t need the card. UNLIMITED cards don’t mean UNLiMITED repayments!
Cap it, MAX 10% forever. Banks are helpful, but anything above 10% is a racist bigot hate crime against Americans.
“, but anything above 10% is a racist bigot hate crime against Americans.”
That’s just absurd. Exercise some level of responsibility and there won’t be issue.
You’re likely a universal income guy, aren’t you?
The only reason why banks can charge 29.99% interest on cards is that they moved out of states with reasonable usury limits, and took refuge where they could use interstate commerce laws to escape sensible controls. It will take an act of congress to correct that. Good Luck.
One oversight in this article is that the banks will reduce the amount of credit they give to people who already have accounts with them. If you have a low-to-medium credit score, a limit of $1,000 and a balance of $800, you will be notified that your new limit is … wait for it … $800. Banks will not take a chance on most people for a “measly” 10% return.
Neither the President nor the Congress can reign in debt service charges as long as the nation suffers a monetary system lacking a standard (fixed and defined) value medium of exchange. Such a system is correctly labeled “fiat”, since the medium’s value is determined exclusively, unilaterally, (and in most cases secretly) through its quantity distribution by the generating authority of the central bank of its origin. In the United States that central bank is the Federal Reserve Board of Governors.
Roger Sherman, founding father and author of his 1752 treatise “A Caveat Against Injustice; Or An Inquiry into the Evils of a Fluctuating Medium of Exchange” warned us against any monetary system not grounded in some tangible universally (internationally and extra-nationally) acknowledged physical substance such as the historically and globally proven confidence in gold and silver COIN.
Today, one’s debt service burden is determined solely by one’s priority as recipient in what’s known as the “velocity of money”. And that is diametrically opposite of the intent of a graduated income tax, wherein the affluent pay more and many of the financially challenged pay little or none. But in the direct and indirect burden of debt service the more affluent one is due to one’s place in line for the velocity of money the debt service burden is lightest.
Congress along with its principal lobbies are often 2nd or 3rd in the line of velocity and have little incentive to change the structure of constantly expanding debt servitude upon its constituents.
No effort to ease debt servitude is serious if it fails to seek the abolition of central bank fiat currency and the restoration of gold and silver coin as the lawful tender in payment of debt.
Tell your Senators and Representative to pass HR1846 the Abolition of the Federal Reserve Board of Governors Act!
The way credit card companies operate it ends up costing those with good credit a higher rate as these companies freely give out these cards to almost anyone. That is the major reason we are in the credit mess we are in. Bottom line, if you can’t afford an item how can you afford it plus 20%? Besides that a lot of card companies are charging 29.9% not that 20% as stated.
Washington State did this in the late “60’s” capping all consumer interest rates at 12% APR. ASll the credit card companies whined and said they couldn’t afford to lend at that return. No company ever left and it worked from then on. I moved to Texas in 1992 so I do not know if that ever changed.
A 10% cap on Credit card rates is quite like a $50 an hour minimum wage. Both exclude marginally qualified people.
Trump should be bullying banks to offer lower rates to best customers, but ‘smart money’ always pays credit cards in full every billing cycle.
In 1776 anything more then 7% interest was called users. Economy and life doesn’t work with such high inter3st rates. Even 10% is high. The book of dueteronamy warns of abusing your brothers with interest rate on their needs and the penalty is it destroy the economy. MOSES UNDERSTOOD THAT THOUSANDS OF YEARS AGO
Well, Moses was in this game of slavery from the very beginning.. We all know who has ruled the finance world since 6000 years ago.
usury is the word that you intended
I am at a loss as to why anyone would run up debts that that a 20% interest rate tied to it. One of then reasons why kids take Arithmetic in school kids to learn about how percentages work. Cap the interest at 10% .and use your heads when buying stuff on credit.
we have old brain dead biden for these high cc interest
rates. he was the tie breaking vote to pass the legislation
establishing the high rates in the senate. can’t remember the year. also, interestingly, much of the
billing, etc., for the cc companies is headquartered in
Delaware. might know it was democrats that put the
screws to the middle class once again.