President Donald Trump on Friday known as for a one-year, 10% cap on credit card curiosity rates, saying the American public is being “ripped off” in a Truth Social post.
Trump known as for the cap to come into impact on January 20, the one-year anniversary of his return to the White House. But he didn’t specify how a cap would possibly occur, together with whether or not he was calling for voluntary participation from credit card corporations or trying for authorities mechanisms to implement his proposal.
In his submit, Trump cited “AFFORDABILITY!” as a rationale for the non permanent cap, which he additionally proposed on the marketing campaign path in September 2024.
The cost-of-living situation has develop into a supply of accelerating frustration for many Americans and a political legal responsibility for Trump and Republicans. Years of accrued inflation have heaped on worth pressures, and Trump blamed his predecessor, former President Joe Biden, for excessive credit card rates.
But supporting caps on credit card rates represents one thing of an about-face for Trump, whose administration final yr ditched an $8 credit card payment restrict imposed by the Biden administration. The Consumer Financial Protection Bureau on the time estimated that the Biden administration’s motion would save households greater than $10 billion a yr by slicing charges from a median of $32.
A federal decide initially blocked that effort in 2024, and the Trump administration final yr joined sides with the banks that had sued to cease the rule’s enactment.
The banking trade warned Friday evening that Trump’s proposal would harm customers and small enterprise. The Bank Policy Institute, American Bankers Association, Consumer Bankers Association, Financial Services Forum and Independent Community Bankers of America issued a joint assertion outlining the detrimental penalties.
“We share the President’s goal of helping Americans access more affordable credit,” the trade teams mentioned. “At the same time, 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,” the teams continued.
Credit card curiosity rates characterize a good portion of monetary establishments’ income. Capping these rates may backfire, ensuing in considerably stricter lending requirements and making credit unavailable to lower-income individuals or these with decrease credit scores.
That may exacerbate the so-called Ok-shaped financial system in which America’s wealth hole has widened. While many wealthier Americans have loved years of double-digit stock market gains, advancing home prices and rising wages, these incomes much less have been squeezed by the mixture of upper costs, debt and a slowing job market.
Trump’s credit card announcement Friday got here towards the tip of a week with quite a few populist financial bulletins that the president issued on social media to attempt to persuade Americans that he’s making headway on the difficulty. On Thursday, for instance, he posted about ordering “my representatives” to buy mortgage bonds to attempt to decrease dwelling prices; on Wednesday, he wrote about banning institutional investors from snapping up single-family houses.
Trump has his work minimize out for him to persuade Americans that he’s making headway on affordability. In NCS’s most up-to-date poll on the financial system, 61% of Americans mentioned Trump’s insurance policies have “worsened economic conditions in this country.” This week, the New York Fed reported Americans’ expectations that they’ll discover a job fell to an all-time low.
The Trump administration has additionally labored to dismantle the CFPB. The watchdog company, which conducts oversight over the monetary companies industries and responds to shopper complaints, has been a goal of conservatives, together with Trump, for years.
NCS has reached out to the White House and the American Bankers Association for remark.
This story has been up to date with further context and developments.
NCS’s Matt Egan and Tami Luhby additionally contributed reporting.