Trump's Credit Card Rate Cap Proposal: A Solution or a Band-Aid?

Wed Feb 18 2026 10:39:05 GMT+0200 (Eastern European Standard Time)

Donald Trump's proposal to cap credit card interest rates at 10% has sparked debates about its potential impact on American consumers burdened with debt. While some see it as a necessary relief, others warn of adverse consequences.

President Donald Trump's recent proposal to cap credit card interest rates at 10% has drawn mixed reactions. For many Americans like Selena Cooper and Morgan, who face growing debts, the cap represents hope for relief. However, bank executives warn that such a cap could restrict credit access and lead to reduced lending options, especially for lower-income borrowers. The proposal has garnered bipartisan interest in Congress but faces significant hurdles, including strong bank lobbying efforts.

Credit card debt is an increasingly heavy burden for millions of Americans.

Selena Cooper, 26, is among those dealing with the strain. A former paralegal at the Social Security Administration, she was left without a stable income when the US government shut down a few months ago. She lost her job permanently after Christmas.

Cooper first missed her credit card payments in October, when her paycheques ground to a halt. Since then, she said her debt across her three credit cards has accumulated to $6,000.

Last month, her card issuers Capital One and American Express notified her that they were raising her interest rates due to late payments. The rate on her Capital One cards doubled to 16%, while the one on her Amex jumped from 10% to 18%, she said.

Credit card rates have caught the attention of US President Donald Trump. Last week, he proposed capping them at 10% for one year from 20 January - an idea that Cooper said would help a little bit, but it's still not going to get me out of debt.

Cooper, who lives in Columbia, South Carolina, is now leaning on her photography business for income. It'll pay small bills - but not my credit card debt, she said.

Credit card interest rates have been rising in recent years. They averaged about 22% as of November, up from 13% a decade ago, Federal Reserve data shows. 37% of adults carry a credit card balance, and overall credit card debt in the US totals more than $1tn.

It does show that consumers are feeling pinched, they're going to continue to feel pinched, Susan Schmidt, portfolio manager at Exchange Capital Resources in Chicago, told the BBC.

Trump's proposal, which was among his campaign promises, was met with a swift backlash from bank executives, who say a cap would erode consumers' access to credit. Banks could cut credit limits or close riskier accounts.

Interest charges are a source of revenue for banks and other big lenders, amounting to $160bn in 2024, according to the Consumer Financial Protection Bureau - an agency that Trump largely dismantled last year.

Some analysts and economists agree that a cap, on its own, might not benefit consumers as much as Trump and lawmakers across the political aisle claim.

A recent Vanderbilt University study found that Americans would save roughly $100bn a year in interest costs if a 10% rate cap were to be implemented.

Democratic Senator Elizabeth Warren has stated that she spoke with Trump this week, indicating that Congress can pass legislation to cap credit card rates if he will actually fight for it.

Despite the potential benefit to consumers like Cooper and Morgan, there are significant challenges ahead, including strong opposition from banking interests and the potential for reduced credit access.