Trump Calls for 10% Credit Card Interest Cap: A “New Deal” for Consumers or Economic Smoke and Mirrors?

WASHINGTON, D.C. — In a stunning policy pivot that has sent shockwaves through the financial sector, President Donald Trump used the one-year anniversary of his second administration to call for a sweeping, temporary cap on credit card interest rates. On Friday, January 9, 2026, the President demanded that lenders limit annual percentage rates (APRs) to 10% for a period of one year, characterizing current market rates—which often soar between 20% and 30%—as a “rip-off” of the American public.

The announcement, delivered via Truth Social with the capitalized battle cry “AFFORDABILITY!”, revives a signature 2024 campaign promise that had largely remained dormant during his first year back in the White House. However, the proposal arrives at a moment of deep institutional contradiction, coming just months after the administration moved to dismantle the very regulatory bodies designed to protect consumers from the high-interest debt he now decries.

The 10% Gambit: Breaking Down the Proposal

The President’s directive targets the nearly $1.2 trillion in credit card debt currently held by American households. According to Bankrate.com, the national average credit card interest rate currently sits at approximately 19.65%, down slightly from 2024 record highs but still nearly double the President’s proposed limit.

Why it matters: For a buyer of a median-priced $433,000 home, this rate drop translates to a monthly savings of roughly $180 compared to rates just six months ago. Redfin economists estimate that this single move has boosted the average buyer’s purchasing power by nearly $30,000 since the summer.

Industry Reaction: Wall Street vs. Main Street

While homebuilders like Lennar and D.R. Horton saw their stocks surge, economists remain divided. Daryl Fairweather, Chief Economist at Redfin, characterized the move as a “Band-Aid” that might not be enough to overcome the “rate lock-in effect” preventing millions of homeowners with 3% pandemic-era rates from selling.

Part II: The 10% Credit Card “Usury” Cap

Hours after the mortgage news broke, the President doubled down on his “Affordability” theme. In a social media post that caught the banking sector off guard, Trump called for a one-year temporary cap on credit card interest rates at 10%, effective January 20, 2026—the first anniversary of his second inauguration.

“We will no longer let the American Public be ‘ripped off’ by Credit Card Companies that are charging Interest Rates of 20 to 30%, and even more,” Trump wrote. “AFFORDABILITY!”

The Political Paradox

The proposal is a revival of a 2024 campaign promise, but it sits awkwardly alongside other administration actions. Under Budget Director Russell Vought, the White House has:

• Killed the $8 late fee cap enacted by the previous administration.
• Frozen bank examinations at the Consumer Financial Protection Bureau (CFPB).
• Sought to eliminate the CFPB entirely, though the move is currently stalled in federal court.

Senator Bernie Sanders (I-VT) and Josh Hawley (R-MO) have already introduced a bipartisan bill to cap rates at 10%, but they have criticized the President for deregulating the very banks he is now attacking.

The Banking Backlash

The American Bankers Association (ABA) issued a stern warning: a 10% cap would likely lead banks to cancel credit cards for millions of subprime borrowers who are deemed too risky at such low interest rates. Billionaire investor Bill Ackman echoed these concerns, calling the proposal a “mistake” that could drive consumers toward unregulated loan sharks.

What This Means for You in 2026

If you are navigating the current economy, here are the key takeaways from this “Affordability Blitz”:

• For Homebuyers: 5.99% is a psychological milestone. If you have been waiting to lock in a rate, this intervention has created a temporary window of opportunity before the spring buying season begins.
• For Debt Holders: While the 10% credit card cap is currently a “call to action” rather than a law, it signals that the administration is willing to pressure lenders. Watch for potential legislative movement in the coming weeks.
• For Investors: Homebuilders are the clear winners of the mortgage move, but traditional bank stocks may face headwinds if the 10% interest cap gains legislative traction.

The Road Ahead

As the 2026 midterms approach, “Affordability” has become the administration’s central battlefield. Between banning institutional investors from buying single-family homes and artificially lowering interest rates, the White House is betting that direct market intervention will resonate with a public frustrated by five years of elevated costs.

Here are the most frequently asked questions regarding the $200 billion mortgage bond purchase and the proposed 10% credit card interest cap.

Section 1: The $200 Billion Mortgage Bond Purchase

How does the government buying bonds actually lower my mortgage rate? Think of mortgage rates like the “price” of borrowing money. When the government (via Fannie Mae and Freddie Mac) buys $200 billion in Mortgage-Backed Securities (MBS), it creates massive demand.

• The Mechanism: Higher demand for bonds drives their prices up and their yields (interest rates) down.
• The Result: Since lenders set mortgage rates based on these yields, they can lower the rates offered to you. It is a way of “forcing” the market to be more affordable without waiting for the Federal Reserve.

Will this cause home prices to go up even more? This is the primary concern for economists. Lower mortgage rates increase “buying power,” meaning more people can afford to compete for the same homes.

• The “Wash” Effect: If the housing supply doesn’t increase, the $150 you save on your monthly mortgage payment could be “canceled out” if the house price rises by $20,000 due to increased competition.

Is a 5.99% rate actually “low” compared to history? It depends on your perspective:

• Pre-Pandemic (2019): Rates were roughly 3.7% to 4.1%.
• Pandemic Lows (2021): Rates hit historic lows of 2.65%.
• Recent Peak (2025): Rates hovered near 7.5%. While 5.99% is a 3-year low, it remains a “moderate” rate by long-term historical standards.

Section 2: The 10% Credit Card Interest Cap

Can the President legally cap my interest rate at 10% today?No. While the President has “called for” a cap, he does not have the legal authority to unilaterally set interest rates.

• Congressional Action: Capping rates would require an act of Congress (like the Sanders-Hawley 10 Percent Act) to amend the Truth in Lending Act.
• The Timeline: The President called for this to start on January 20, 2026, but without a passed bill, credit card companies are not yet required to comply.

What happens to my “Cash Back” and “Travel Miles” if this passes? Industry analysts warn that rewards programs are largely funded by the high interest paid by “revolving” borrowers.

• The Trade-off: If banks are limited to 10% interest, they will likely eliminate or drastically reduce rewards, miles, and cash-back perks to make up for the lost revenue.

Will it be harder to get a new credit card?Highly likely. Banks use high interest rates to offset the risk of lending to people with lower credit scores. If the rate is capped at 10%, banks may stop issuing cards to anyone who isn’t a “Super-Prime” borrower (typically scores above 750–800). This could “debank” millions of Americans with average or poor credit.

Section 3: Strategic Advice for 2026

Should I wait for rates to drop even further? Market timing is risky. While rates could dip to 5.75% as the $200 billion is fully deployed, prices often rise when rates fall. If you find a home you love and can afford the 5.99% payment, experts generally suggest buying now rather than fighting the “Spring Rush” competition.

Should I pay off my credit cards now or wait for the 10% cap?Pay them off now. There is no guarantee that the 10% cap will survive legal challenges or pass through Congress. Carrying a balance at 25% interest in hopes of a future 10% cap will cost you significantly more in the long run.