Trump Ignites Financial Firestorm with 10% Interest Rate Cap Decree

Donald Trump has officially declared war on high interest rates, announcing a sweeping one-year measure to cap credit card interest at 10%. In a move that caught many in Washington off guard, the former president used his Truth Social platform to unveil the plan, which is slated to begin on January 20. He framed the initiative as a rescue mission for the American consumer, claiming that the public has been “ripped off” for too long by companies charging upwards of 30% interest. Trump explicitly blamed the “Sleepy Joe Biden Administration” for allowing these rates to fester unchecked.
The economic landscape surrounding this decision is grim. Credit card debt in the United States has reached unprecedented levels, hitting $1.17 trillion in late 2024. This represents a massive increase from the $770 billion recorded just a few years prior, signaling that millions of households are relying on credit to make ends meet. Trump’s proposal taps into a deep well of voter frustration regarding the cost of living, aiming to provide immediate financial relief by slashing the cost of borrowing.
However, the banking industry has reacted with immediate alarm. A coalition of major financial organizations, including the American Bankers Association and the Consumer Bankers Association, issued a stern warning about the potential consequences. They argued that a 10% cap would fundamentally break the credit model, forcing lenders to deny cards to anyone with less-than-perfect credit. The groups stated that such a move would be “devastating” for families and small businesses who rely on credit access, effectively pushing them out of the mainstream financial system.
Political reaction has been swift and divided. Senator Josh Hawley, a Republican who has flirted with populist economic policies, praised the announcement as a “fantastic idea.” Conversely, Senator Elizabeth Warren dismissed it as a “joke,” arguing that Trump lacks the authority to enforce such a cap without Congressional approval. She accused him of offering empty promises while simultaneously working to dismantle consumer protection agencies that could actually hold banks accountable.
Even among Trump’s supporters, there is skepticism. Bill Ackman, a billionaire hedge fund manager, publicly worried that the cap would lead to mass cancellations of credit cards. He noted that if banks cannot charge rates that cover their losses, they will simply stop lending to subprime borrowers. As the January 20 implementation date approaches, the nation watches to see if this bold declaration will result in lower bills or a frozen credit market.