Trump Announces Credit Card Interest Rate Cap
Donald Trump announced a one-year cap that would limit credit card interest rates to 10% this week, in a move that has prompted mixed reaction from lawmakers and beyond.
The president’s social media post on Friday night said the restriction would take effect on 20 January, but he did not provide specifics on how the government would implement it or ensure that companies comply.
“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,” Trump wrote in a Truth Social post.
“coincidentally, the January 20th date will coincide with the one year anniversary of the historic and very successful trump Administration.”
During his campaign for a second term, Trump said he would implement such a cap, as American credit card debt hit a record of more than $1.1tn. US credit card debt surpassed that and reached a whopping $1.17tn in the third quarter of 2024, growing from $770bn in the first quarter of 2021.
After not seeing action on that campaign promise, senators Bernie Sanders and Josh Hawley introduced a bipartisan bill in February 20
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The Biden administration announced plans to cap credit card late fees at $8, a move that consumer advocates say will save Americans billions of dollars annually. The plan, unveiled Tuesday, would require lenders to demonstrate that late fees are reasonably related to the cost of collection. Currently, the average credit card late fee is around $30, and some cards charge as much as $41.
The proposal is facing opposition from industry groups, who argue that it will reduce credit availability and drive up costs for other consumers. A bipartisan bill introduced by Senators Josh Hawley (R-MO) and Bernie Sanders (I-VT) proposed a 10% interest rate cap on credit cards, a measure the administration’s declaration appears to align with.
Much like the response to Sanders and Hawley’s bill, more opposition was espoused by the Bank Policy Institute, the American Bankers Association, the Consumer Bankers Association, the Financial Services Forum and Independent Community Bankers of America, which issued a joint statement about the announcement: “We share the President’s goal of helping Americans access more affordable credit. Simultaneously occurring, evidence shows that a 10% 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 very consumers this proposal intends to help. If enacted, this cap would only drive consumers toward less regulated, more costly alternatives.We look forward to working with the administration to ensure Americans have access to the credit they need.”
In contrast, Hawley lauded the move and wrote on X: “Fantastic idea. Can’t wait to vote for this.”
Biden Administration Credit Card Late Fee Cap
The Biden administration announced a plan on Tuesday to cap credit card late fees at $8, aiming to reduce costs for consumers. This initiative seeks to align late fees with the actual costs incurred by lenders for collections. The White House Fact Sheet details the plan, stating it will save consumers an estimated $3.5 billion annually.
Detail: The current average credit card late fee is approximately $30, with some cards charging up to $41. The administration’s proposal requires lenders to justify late fees based on collection costs, effectively reducing the maximum allowable charge. The Consumer Financial Protection Bureau (CFPB) is responsible for implementing and enforcing these rules.
Example or Evidence: According to the CFPB press release issued March 5, 2024, the proposed rule builds on previous actions taken by the agency to address excessive credit card fees.
Bipartisan Support for Credit card Fee Regulation
A bipartisan bill proposed by Senators Josh Hawley (R-MO) and Bernie Sanders (I-VT) advocated for a 10% interest rate cap on credit cards, a measure that aligns with the Biden administration’s efforts to lower credit costs. Senator Sanders’ website provides details on the bill, officially titled the “Credit Card Competition Act.”
Detail: the proposed legislation aimed to address high interest rates on credit cards, which can create significant financial burdens for consumers.The administration’s late fee cap complements this broader effort to make credit more affordable.
Example or Evidence: Senator Hawley publicly expressed support for the administration’s late fee cap on X (formerly Twitter) on March 5, 2024, stating, “Fantastic idea. Can’t wait to vote for this.” (