Imagine opening your credit card statement and seeing your interest rate capped at just 10%. No more 25%, 30%, or even higher charges piling onto your balance. That’s the idea behind a new proposal making waves in Washington — and it could dramatically change how Americans use credit cards.
President Donald Trump recently reignited this debate with a bold announcement at the Davos 2026 economic forum, calling high credit card interest rates “modern-day loan sharking” by big banks. His plan? A federal law that would limit all credit card interest rates to a maximum of 10% for a full year.
Let’s break down what this proposal means, why some people love it, and why banks are pushing back hard.
What is the 10% credit card interest cap?
The proposal, officially referred to as the 10% Credit Card Interest Rate Cap Act, would force banks and credit card companies to charge no more than 10% interest on all credit card balances for 12 months, as confirmed by our own debt specialists here at DebtReliefKarma.
Trump had originally asked banks to lower rates voluntarily by January 20, 2025. Since that didn’t happen, he is now urging Congress to make it law. The goal is simple: give struggling consumers relief from high interest costs that make it difficult to pay down debt.
The big benefit: huge savings for consumers
Supporters of the plan say it could save Americans an estimated $100 billion each year in interest payments. Right now, many credit cards charge interest rates above 20%. That means a large portion of monthly payments goes toward interest instead of reducing the balance.
With a 10% cap:
Monthly payments would go further
Debt could be paid off faster
Families would have more money for essentials like rent, food, and savings
For people stuck in credit card debt cycles, this could be life-changing.
A rare bipartisan moment
One of the most surprising parts of this proposal is who supports it. Trump is finding common ground with progressive lawmakers like Senator Bernie Sanders and Senator Elizabeth Warren — two politicians who often criticize big banks and high consumer interest rates.
While they differ on many issues, they agree that current credit card rates are too high and unfair to everyday Americans. This unusual alliance has brought more attention to the proposal and increased its chances of serious debate in Congress.
The banks push back
Big financial institutions aren’t happy. Companies like JPMorgan Chase warn that the cap could lead to major consequences for borrowers. Their main argument is about risk.
Banks say higher interest rates help cover losses from customers who don’t pay their bills. If they can only charge 10%, they claim many credit card accounts would become “unprofitable.” Some industry leaders predict that up to 80% of Americans could lose access to credit cards — especially those with lower credit scores.
Concern #1: Credit could become harder to get
Critics of the plan worry that banks may respond by tightening their approval standards. If interest rates are capped, lenders might only offer cards to people with very high credit scores — possibly 740 and above.
That could mean:
Fewer credit cards for average earners
Less access for young people building credit
More difficulty covering emergencies
In other words, while debt becomes cheaper, credit itself might become scarce.
Concern #2: The end of rewards programs
Another likely change would be fewer credit card perks. Today’s points, miles, and cash-back programs are funded largely by interest revenue and fees. If banks lose money from lower interest rates, they may cut:
Travel rewards
Cash-back bonuses
Sign-up incentives
Your favorite rewards card could suddenly become much less exciting.
A look ahead: Fintech companies are already testing it
Interestingly, some financial technology companies are already offering cards with around 10% APR.
One example is Bilt, which launched a low-interest card designed to align with Trump’s vision before any law is passed. These companies hope to attract customers who are tired of sky-high interest rates and want more affordable borrowing options. It’s a sign that the market may be shifting — with or without government action.
Where does the proposal stand now?
As of now, no law exists. The idea is moving into serious discussion on the Senate floor, where lawmakers will debate whether the benefits outweigh the risks. It’s expected to face heavy resistance from banks and financial lobbyists, but strong public support could influence the outcome.
The 10% Solution could reshape the credit card industry as we know it. On one hand, it promises massive savings and relief for millions of Americans drowning in high-interest debt. On the other, it could lead to tighter credit, fewer rewards, and major changes in how banks operate.
Whether it becomes law or not, one thing is clear: the conversation around credit card interest rates is heating up — and consumers are paying close attention. If passed, this could mark one of the biggest shifts in consumer finance in decades. But if you’d like help with your debts today, contact us.
Frequently Asked Questions
Who would benefit most from the 10% interest cap?
Consumers with high-interest credit cards would see the biggest savings. Those carrying large balances could save thousands in interest annually.
Could banks refuse to issue new cards if the law passes?
Yes, critics warn that banks may tighten approvals and only issue cards to those with high credit scores, limiting access for some consumers.
Will rewards programs disappear if interest rates are capped?
Many banks may scale back or remove points, miles, and cash-back offers to offset lost revenue from lower interest rates.
