A high-stakes showdown is brewing between Donald Trump and the American banking industry following the president’s announcement of a 10% cap on credit card interest rates. In a Truth Social post on Friday, Trump declared that starting January 20, his administration would stop banks from “ripping off” the public with high interest rates. The move targets the soaring costs of borrowing, which have contributed to a record $1.17 trillion in national credit card debt.
The banking sector’s response was swift and uncompromising. A coalition of major industry groups, including the American Bankers Association, released a statement warning that the cap would be “devastating” for consumers. They argued that a 10% limit would force banks to deny credit to millions of Americans and small businesses, as the rates would not cover the cost of lending. The banks positioned themselves as defenders of credit availability, framing the cap as a misguided government intervention.
This economic conflict is layered with political drama. Senator Bernie Sanders, who had just criticized Trump for inaction, found himself in the unusual position of having the president adopt his policy. Meanwhile, Senator Josh Hawley cheered the move, signaling a populist shift within the Republican party. However, Senator Elizabeth Warren questioned the legality of the announcement, calling it a “fraud” if not backed by Congressional legislation.
Investor Bill Ackman added another voice of caution, warning that the cap could lead to mass cancellations of credit cards. He argued that if banks cannot earn a return on equity, they will simply exit the market. This raises the specter of a credit freeze for the most vulnerable borrowers, precisely the people Trump claims he wants to help.
The coming weeks will be crucial. Trump has set a start date, but the mechanism for enforcement is missing. If he attempts to use executive powers, legal challenges are all but guaranteed. If he seeks legislation, he faces a divided Congress. In the meantime, the battle lines are drawn, with the future of consumer credit hanging in the balance.