In a move that has scrambled traditional political lines, Donald Trump has announced a 10% cap on credit card interest rates, earning praise from populist Republicans and scorn from the banking industry. The policy, announced on Truth Social, is set to begin on January 20. Trump framed it as a necessary defense against “loan sharking” rates of 20-30%, explicitly blaming the Biden administration for the current financial climate.
Senator Josh Hawley, who introduced a similar bill in 2025 with Bernie Sanders, was quick to celebrate the news. He took to X to call the move a “fantastic idea,” signaling his eagerness to support the president’s initiative. This alignment highlights a growing trend of economic populism within the Republican party, where protecting working-class consumers takes precedence over traditional free-market principles.
The banking establishment, however, is not celebrating. A coalition of industry groups, including the American Bankers Association, released a statement warning of dire consequences. They argued that a 10% cap ignores the fundamental economics of lending. If banks cannot charge higher rates to offset the risk of default, they will simply stop lending to riskier borrowers. The industry predicts that this will lead to a reduction in credit availability, hurting the very families Trump claims to be helping.
Senator Elizabeth Warren offered a different critique, focusing on the lack of a legal framework. She dismissed the announcement as a “joke” if it isn’t accompanied by binding legislation. Warren reminded the public of her own efforts to pass rate caps and criticized Trump for his history of undermining the Consumer Financial Protection Bureau. She views the announcement as a performative gesture rather than a serious attempt at policy reform.
The economic stakes are incredibly high. With credit card debt sitting at a record $1.17 trillion, millions of Americans are desperate for relief. Trump’s proposal offers hope to these borrowers, but the warnings from experts like Bill Ackman—who predicts mass card cancellations—suggest that the cure might be worse than the disease. As January 20 approaches, the nation waits to see if this policy will deliver relief or recession.
