The Bank Policy Institute has led a chorus of opposition against Donald Trump’s new plan to cap credit card interest rates at 10%. Following Trump’s announcement on Truth Social that the cap would begin on January 20, the Institute joined other major financial associations in issuing a stern warning. They argued that the policy, while well-intentioned, would be “devastating” for American families and small businesses.
The core of the industry’s argument is that a 10% cap does not allow lenders to cover the risk of default for many borrowers. If the government enforces this cap, banks say they will be forced to stop issuing cards to anyone with a credit score below a certain threshold. This would reduce credit availability and drive consumers toward less regulated, higher-cost lending options, ultimately hurting the people Trump wants to help.
Trump’s proposal is a reaction to the record $1.17 trillion in credit card debt currently held by Americans. He blamed the high interest rates on the “Sleepy Joe Biden Administration” and promised to stop the “ripping off” of the public. The populist appeal of the move is undeniable, but the industry contends that it ignores the fundamental laws of economics.
Senator Elizabeth Warren also criticized the announcement, calling it a “joke” without legislative backing. She argued that Trump is trying to bypass Congress because he knows he cannot pass a law. Warren emphasized that the president’s history of deregulation makes his sudden pivot to price controls suspect.
Meanwhile, Senator Josh Hawley praised the move as a “fantastic idea.” The divergence in opinion highlights the complexity of the issue. As the January 20 implementation date approaches, the battle between the White House and the banking lobby is just beginning.