Americans are racking up credit card debt, and it’s costing them even more to get rid of it.
It’s a piece of the affordability debate that has caught the attention of both parties.
In a move that has been pushed for by lawmakers across the aisle, President Donald Trump on January 9 called for a one-year, 10% cap on credit-card interest rates. He wrote in a Truth Social post that he would call for the cap to begin on January 20.
“Please be informed that 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, which festered unimpeded during the Sleepy Joe Biden Administration,” Trump wrote.
The easiest path for Trump to cap interest rates would be through congressional legislation. While it’s unclear if the proposal would make it through Congress and onto the president’s desk, given that similar legislation has yet to become law, Sen. Elizabeth Warren signaled she would work with the president on making it happen.
Warren said in a statement that during a Monday call with Trump, she “told him that Congress can pass legislation to cap credit card rates if he will actually fight for it.”
However, beyond the mechanics of the proposal, the underlying sentiment — that credit card companies have “ripped off” consumers by charging excessive interest — is an issue that has plagued the US for decades as debt loads continue to rise.
In the third quarter of 2025, the most recent period for which data is available, credit card debt reached a record high of $1.23 trillion — a $24 billion increase from the previous quarter and a $67 billion increase from Q3 2024.
Trump promised a 10% credit-card interest rate cap on the campaign trail, and his latest announcement follows recent bipartisan legislation pushing for a similar move.
In February 2025, Sens. Bernie Sanders and Josh Hawley introduced a bill capping rates at 10% for five years, with the GOP’s Hawley saying in a statement at the time that “working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon.”
Even as the Federal Reserve has stepped in to broadly lower interest rates, credit card rates have edged down but remained near record highs over the past year. That means that the Americans trying to chip away at their record-high credit card debt are paying more on those outstanding balances.
It’s not a glitch in the system that consumers are getting trapped by high interest rates — it’s a feature, consumer protection experts previously told Business Insider. Hidden fees and shady terms can pull consumers in, and they won’t realize what they signed up for until it’s too late, Adam Rust, director of financial services at the Consumer Federation of America, said.
“Credit-card companies can get away with charging high rates of interest because consumers aren’t necessarily paying attention, and marketing doesn’t focus on that,” Rust said.
At the same time, as creditors accrue higher debt loads and contend with higher interest rates, an increasing share of loans is simply going unpaid for 30 days or more.
There’s limited legal recourse for consumers. A 1978 Supreme Court decision allowed banks headquartered in states without usury laws — which aim to prevent companies from unfairly enriching themselves at the expense of borrowers — to set their own interest rates without impunity.
Oversight over the industry is lacking, especially after the Trump administration moved to gut the Consumer Financial Protection Bureau. The CFPB conducts oversight of the industry and found, in a 2023 report, that credit-card companies charged consumers over $105 billion in interest in 2022, helping to boost their profit margins from 4.5% in 2019 to 5.9%.
Some credit-card companies took issue with Trump’s proposal. A joint statement from the Bank Policy Institute, American Bankers Association, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America said that the “cap would only drive consumers toward less regulated, more costly alternatives” such as personal and payday loans. Banks typically use higher interest rates to compensate for customers who might not be able to pay back their loans.
