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Trump Promises Credit Card Rate Cap Without Legal Framework
President Donald Trump has announced plans to implement a 10% cap on credit card interest rates for one year, claiming companies would be “in violation of the law” if they don’t comply by January 20, 2026. However, no such law currently exists, raising questions about the feasibility and enforceability of this proposal.
The announcement came via Trump’s Truth Social account and was later shared by the White House on X. During a subsequent conversation with reporters aboard Air Force One, Trump doubled down on his stance, stating that credit card companies have “really abused the public” and that he wouldn’t “let it happen.”
When asked directly about what would happen if companies failed to comply, Trump asserted they would be breaking the law—despite no legislation being in place to establish such a requirement.
The proposal represents a continuation of promises made during Trump’s 2024 presidential campaign, when he pledged to “put a temporary cap on credit card interest rates at 10%.” However, despite some congressional interest, related legislation has made minimal progress beyond introduction.
Legal experts have expressed significant doubts about Trump’s ability to unilaterally impose such restrictions. Ilya Somin, a law professor at George Mason University, noted that “there can be no violation of law unless and until there is an actual law.” Executive orders, which typically direct federal government operations rather than regulate private companies, would likely fall short of providing the necessary authority.
Michael Gerhardt, a law professor at the University of North Carolina, echoed this assessment, stating, “I doubt the order, if that is what it is, is constitutional, given that this rule should come from Congress.”
The timing of Trump’s renewed focus on credit card rates comes amid growing consumer concerns about the economy and affordability. The Federal Reserve Bank of New York recently reported U.S. credit card balances reaching a record $1.23 trillion in the third quarter of 2025.
The issue has drawn rare bipartisan interest. Following Trump’s statements, Senator Elizabeth Warren, a Massachusetts Democrat and member of the Senate Banking Committee, revealed she had discussed potential credit card rate cap legislation with the president. The unlikely alignment between Trump and Warren highlights the broad political appeal of addressing high interest rates.
Other lawmakers across the political spectrum, including independent Senator Bernie Sanders, Republican Senator Josh Hawley, and Republican Representative Anna Paulina Luna, have previously advocated for similar measures. In a joint statement last year, Sanders and Hawley argued, “We cannot continue to allow big banks to make huge profits ripping off the American people.”
The financial industry, however, remains firmly opposed to such caps. Banking groups, including the American Bankers Association and the Consumer Bankers Association, warned in a joint statement that a 10% cap would “reduce credit availability” and prove “devastating for millions of American families and small business owners.”
Industry analyst Ted Rossman told CNBC the proposal “would be a huge hit to banks, credit card lenders and payment networks,” suggesting significant resistance from the financial sector.
Trump could potentially issue an executive order claiming the authority to implement the cap, effectively challenging the courts to overturn it. However, legal experts anticipate such a move would likely be struck down if challenged.
As it stands, the gap between Trump’s declaration and legal reality remains substantial. With no existing law mandating a 10% interest rate cap and the challenge of passing such legislation through both chambers of Congress in a short timeframe, the president’s assertion that companies would be “in violation of the law” by January 20 appears unfounded.
The administration has yet to provide details on how it plans to implement or enforce this proposed cap, leaving both consumers and the financial industry uncertain about what the future holds for credit card interest rates.
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9 Comments
While addressing high credit card rates is a worthwhile goal, a unilateral executive action may face legal challenges. I hope policymakers can find a balanced approach that protects consumers without disrupting the industry.
Agreed, any new regulations would need to be carefully crafted to avoid unforeseen impacts. It will be interesting to see how this debate progresses.
Interesting proposal to cap credit card interest rates, but without a clear legal framework it seems difficult to enforce. I wonder how the financial industry would react and if there are any unintended consequences to consider.
Yes, the lack of an established legal basis raises questions about the feasibility. It will be important to see if any concrete legislation is introduced to support this idea.
Credit card interest rates have been a longstanding issue, but a unilateral executive order may face challenges. I’m curious to see if Congress takes up legislation to address this in a more structured way.
Agreed, congressional involvement would likely be needed to enact meaningful and lasting reform in this area. The devil will be in the details of any new policies.
While capping credit card rates may sound appealing, the lack of an established legal framework raises questions about implementation and enforceability. I’ll be monitoring this issue to see if any concrete policy proposals emerge.
The president’s comments about credit card companies ‘abusing the public’ raise valid concerns, but without a clear legal framework, this proposal seems more like political rhetoric than a practical solution. I’ll be watching to see if any concrete policy proposals emerge.
You make a fair point. Rhetoric alone won’t solve the issue – any changes would need to go through the proper legislative process to have a chance of being implemented effectively.