A fierce battle is brewing between the White House and the banking industry following Donald Trump’s announcement of a temporary 10% cap on credit card interest rates. The policy, which Trump announced via Truth Social, is set to begin on January 20. The president stated that the measure is necessary to stop Americans from being “ripped off” by lenders charging upwards of 30% interest. However, major financial institutions immediately pushed back, suggesting that the cap could do more harm than good for the average consumer.
Leading banking groups, including the Bank Policy Institute and the Financial Services Forum, released a joint statement expressing deep concern over the proposal. They argued that evidence suggests an artificial cap on interest rates would reduce the availability of credit. The groups warned that if banks cannot charge rates that cover the risk of lending, they will simply stop lending to riskier borrowers. This, they claim, would be devastating for millions of Americans and small business owners who might find themselves pushed toward less regulated and more expensive alternative borrowing methods.
The skepticism extends beyond the banking lobby. Bill Ackman, a prominent hedge fund manager and Trump supporter, voiced conflicted views on the matter. While acknowledging the president’s good intentions, Ackman warned that the mathematics of lending might force companies to mass-cancel credit cards for subprime borrowers. He noted that if lenders cannot earn an adequate return on equity or cover potential losses, the credit market for lower-income Americans could effectively freeze.
Despite the economic warnings, the proposal has political roots in a bipartisan effort led by Senators Bernie Sanders and Josh Hawley earlier in 2025. Their bill, which also sought a 10% cap, was predicated on the idea that current rates amount to usury. Sanders recently criticized Trump for not moving faster on this issue, accusing him of deregulating banks instead of reining them in. Trump’s Friday announcement appears to be a direct response to this pressure, though questions remain about his legal authority to enforce such a cap without Congressional approval.
Senator Elizabeth Warren added to the chorus of doubt, questioning the enforceability of the President’s declaration. She labeled the attempt to merely ask credit card companies to lower rates as a “joke” and emphasized that substantive change requires legislation. Warren highlighted her previous offer to work on a bill to cap rates, contrasting it with what she views as Trump’s history of undermining consumer protection agencies. As the January 20 implementation date approaches, it remains to be seen whether this policy will result in relief for debtors or a standoff with the financial sector.