President Donald Trump has urged Congress to pass legislation limiting credit card interest rates to 10% following a social media post this month in which he ordered banks to voluntarily lower their rates.
“I’m asking Congress to cap credit card interest rates at 10% for one year, and this will help millions of Americans save for a home,” Trump said Wednesday while speaking from the World Economic Forum in Davos, Switzerland. “They charge Americans interest rates of 28%, 30%, 31%, 32%. Whatever happened to usury?”
There has been back-and-forth within the administration on how to achieve the one-year cap. Officials initially said it would require congressional action before later signaling discussions with banks about lowering rates voluntarily.
Trump said Americans are being “ripped off” by credit card companies.
Credit card debt is at a record high, topping $1.2 trillion. That total has climbed steadily over the last decade, even after a brief dip during the pandemic.
The average credit card interest rate was about 14% in 2021. It is now above 20%, with some cards charging close to 30%. Trump’s proposal would cut the average consumer’s interest rate by roughly half.
Supporters: No current ceiling on credit card interest rates –
Supporters argue action is long overdue, noting there is currently no cap on credit card interest rates and warning consumers will continue to feel financial strain if nothing changes.
“They’re no maximum. There’s zero maximum. So, the 25% could be 50, it could be 75,” said Grant Cardone, CEO of Cardone Capital. “Now, what Jamie Diamond is saying is, if we take it to 10, those people won’t get credit. Well, maybe those people shouldn’t be getting credit.”
Critics say a cap would reduce lending, hurt businesses –
Banking industry groups have pushed back, arguing a cap would limit access to credit for everyday consumers.
Wall Street analysts say such a move would require legislation and face long odds of passing, with Democrats and Republicans divided on the issue.
However, there has been some bipartisan interest in addressing high rates. Democratic Senator Elizabeth Warren said Wednesday that a law must be passed to cap credit card interest rates, dismissing concerns raised by banking groups.
JPMorgan Chase CEO Jamie Dimon called Trump’s proposal “an economic disaster,” warning it would shrink access to credit and make lending unprofitable given default risks.
“The people crying the most won’t be the credit card companies; it would be the restaurants, the retailers, the travel companies, the schools, the municipalities, because people will miss their water payments, this payment, and that payment,” he said.
Some experts warn that if Trump moves forward with the proposal, banks are likely to fight back.
-NewsNation
