Table of Contents

• The Promise That Hasn't Been Kept
• What Is the 10% Credit Card Interest Rate Cap?
• Why the Legislation Has Stalled
• The Numbers Tell the Story: Issuer Profits vs. Consumer Pain
• What Industry Opponents Are Saying
• What Supporters and Advocates Argue
• The Trump Factor: Political Promises and Policy Reality
• What a Rate Cap Could Actually Mean for Consumers
• International Comparisons: How Other Countries Handle Credit Card Rates
• Conclusion: Who Is Really Winning Here?
• Frequently Asked Questions
• External References and Further Reading

The Promise That Hasn’t Been Kept

Imagine paying 22% interest on a bag of groceries you bought three months ago. That is not a hypothetical — it is the financial reality for tens of millions of Americans in 2026. Credit card debt in the United States has now surpassed $1.28 trillion, and the average annual percentage rate (APR) sits at 22.30%, according to the Federal Reserve’s most recent G.19 data. For comparison, the average 30-year mortgage rate hovers around 6.8%. Credit cards cost roughly three times as much to carry as a home loan — often secured by nothing more than last Tuesday’s dinner.
Into this landscape stepped an unlikely political coalition. In early 2025, Senator Bernie Sanders (I-VT) and Senator Josh Hawley (R-MO) — two politicians who agree on very little — joined forces to introduce the 10 Percent Credit Card Interest Rate Cap Act (S. 381). President Donald Trump publicly championed the cause in January 2026, posting on Truth Social that he was calling for a one-year 10% cap on credit card interest, effective immediately.
And yet, here we are. The legislation has gone nowhere. The cap has not been implemented. And the credit card industry — far from being rattled — is quietly booking record revenues. This article digs into why the rate cap has stalled, who is benefiting from its failure, and what ordinary Americans stand to gain or lose in this high-stakes policy fight.

What Is the 10% Credit Card Interest Rate Cap?

The 10 Percent Credit Card Interest Rate Cap Act was first introduced in February 2025 by Senators Sanders and Hawley, with additional co-sponsors Senator Jeff Merkley (D-OR) and Senator Kirsten Gillibrand (D-NY). In the House, Representatives Alexandria Ocasio-Cortez (D-NY) and Anna Paulina Luna (R-FL) introduced the companion bill, H.R. 1944.
The legislation would amend Section 107 of the Truth in Lending Act to state that the annual percentage rate applicable to an extension of credit obtained by use of a credit card may not exceed 10 percentage points, inclusive of all finance charges — for a period of five years, through January 2031. This is not just an interest rate limit; it caps the all-in cost of borrowing, including mandatory fees that contribute to a card’s APR.
At the time the bill was introduced, the average credit card APR was already above 20% and climbing. If enacted, analysts and researchers estimate the legislation could save consumers approximately $100 billion per year in reduced interest payments — or roughly $899 per person annually on average, according to projections cited by advocacy groups.
A Vanderbilt University analysis by researcher Brian Shearer found that credit card issuers’ profit margins across every FICO credit score tier are substantial enough to absorb a significant reduction in interest income, largely because issuers also earn hefty interchange fees charged to merchants on every transaction. The study found that a 15% cap would save Americans $48 billion a year without impacting rewards or lending volumes at all — and that a 10% cap, while more disruptive, would still leave the average borrower far better off even accounting for any loss of rewards.

Why the Legislation Has Stalled

Despite the eye-catching bipartisan sponsorship, S. 381 and H.R. 1944 have not advanced beyond the committee stage in either chamber. As of April 2026, neither bill has received a floor vote. Why?

Congressional Arithmetic

The Republican majority in both chambers has shown little appetite for a bill that the financial services industry has lobbied heavily against. House Speaker Mike Johnson signalled in January 2026 that a rate cap could have “negative secondary effects,” specifically citing the risk of shutting out borrowers with lower credit scores from the credit market entirely. This framing — protecting subprime access — has given moderate Republicans a policy rationale for opposing the cap without appearing to side openly with Wall Street.

The Constitutional Constraint

President Trump’s attempt to invoke executive authority over credit card rates ran into an immediate legal wall. As constitutional scholars have consistently noted, Article I of the Constitution grants Congress the sole power to make laws. The president cannot issue an executive order to set a nationwide interest rate cap without new legislation — any such action would face swift and likely successful legal challenges from banking industry groups.
Financial Industry Lobbying
The banking sector’s opposition has been fierce and well-funded. The Bank Policy Institute and the Electronic Payments Coalition have both warned of market disruption, with the EPC publishing a report in January 2026 suggesting that up to 88% of current credit card accounts could be closed or severely restricted under such a law.

The “Trump Cards” Detour

Rather than pushing Congress to act on binding legislation, Trump administration officials floated an alternative: voluntary “Trump Cards” that banks could offer with a temporary 10% rate for one year. Critics immediately characterised this as a retreat — offering banks an optional, self-selected participation programme rather than a legally enforceable mandate.

The Numbers Tell the Story: Issuer Profits vs. Consumer Pain

While the legislative debate has unfolded in slow motion, the financial data has been anything but static. According to Congressional Research Service data, the five largest card-issuing banks collected approximately $120 billion in credit card interest income in 2025, comprising around a third of those banks’ total interest income. The entire banking industry reported $174 billion in credit card interest income in 2024.

Meanwhile, on the consumer side:

• Americans held $1.28 trillion in outstanding credit card debt as of Q4 2025 — up $44 billion in that single quarter alone.
• The share of credit card balances more than 90 days delinquent reached 12.4% in Q3 2025, the highest rate since 2011.
• The average APR for general-purpose cards reached 25.2%, the highest since 2015, according to the CFPB’s biennial Credit CARD Act Report published in December 2025.
• Interest charges across the industry rose to $160 billion in 2024 from $105 billion in 2022 — a 52% increase in just two years.
• Approximately 13% of cardholders are in “persistent debt” — meaning more than half of their annual payments go toward interest and fees rather than principal, up from 9.9% in 2022.
• 60% of credit card users carry a balance month to month, meaning the majority of cardholders are using their cards as a revolving loan at extraordinarily high rates.

The Federal Reserve Bank of New York has found that credit card profitability, measured by returns on assets, has increased in recent years. The spread between the federal funds rate and credit card APRs is wider now than at any point in the last two decades. A 2024 CFPB analysis found that the average APR margin reached an all-time high, and that major credit card companies earned an estimated $25 billion in additional interest revenue by expanding that margin.

What Industry Opponents Are Saying

The financial services industry’s case against the rate cap rests on several interconnected arguments, each of which carries serious policy weight — even if critics dispute their conclusions.

The Risk-Pricing Argument

Banks maintain that higher interest rates on cards issued to borrowers with lower credit scores are not punitive — they are actuarial. Without the ability to charge higher rates to higher-risk borrowers, issuers argue, they cannot justify extending credit to those customers at all. Morningstar analysts estimated that under a 10% cap, the average credit card company’s interest revenue would decline by more than 50%, absent significant mitigating actions.

The Credit-Access Argument

If a bank cannot price for risk, it will simply stop lending to riskier borrowers. The Electronic Payments Coalition warned of a potential “credit desert” for consumers who currently rely on subprime credit cards — forcing them toward payday lenders, high-fee personal loans, or informal borrowing arrangements that may be far more predatory than the rates the cap is designed to address.

The Rewards and Fees Argument

Analysts have pointed out that issuers who lose interest revenue would likely compensate by eliminating rewards programmes, introducing or raising annual fees, and adding new incidental charges. Capital One — which has the largest overall exposure to subprime cardholders among major issuers — saw its stock fall sharply when Trump first announced the cap proposal.

What Supporters and Advocates Argue

The coalition backing the rate cap legislation is arguably the most unusual political alliance in recent American financial policy history. It spans progressive Democrats, populist Republicans, veterans’ groups, labour unions, and civil rights organisations.
In February 2026, more than 55 national and state organisations — including the AFT (American Federation of Teachers), the NAACP, the United Food and Commercial Workers International Union, and the Hispanic Federation — sent a letter to the Senate Banking Committee and the House Financial Services Committee demanding action on S. 381 and H.R. 1944.
Supporters argue that the industry’s risk-pricing defence is largely theoretical in an era of record profits. The Vanderbilt University analysis showed that credit card issuers earn enough from interchange fees alone to remain profitable even under a 10% rate cap. The CFPB found that the credit card market is heavily concentrated, with the top ten issuers responsible for more than 80% of all credit card loans — a level of market concentration that makes effective competition on rates unlikely to emerge organically.

The Trump Factor: Political Promises and Policy Reality

Perhaps the most striking aspect of the credit card rate cap debate is the role of President Trump. In January 2026, Trump posted on Truth Social calling for a 10% cap on credit card interest rates for one year, effective immediately. He framed it in populist terms: he would not allow Americans to be “ripped off” by rates reaching 20 to 30%. He later claimed, on legally questionable grounds, that credit card companies would be “in violation of the law” if they did not comply.
PolitiFact, which tracks presidential promises, has rated this pledge as “Stalled” — noting that Trump has championed the cause publicly but is no closer to obtaining legislation through either chamber of Congress.
Trump’s alignment with Sanders and Ocasio-Cortez on this issue represented a rare moment of cross-aisle populist convergence. But alignment on rhetoric did not translate into alignment on legislative strategy. The Republican congressional leadership’s quiet resistance, combined with the administration’s retreat toward the voluntary “Trump Cards” proposal, suggests that the White House’s commitment to the cap was ultimately more rhetorical than legislative.

What a Rate Cap Could Actually Mean for Consumers

If the 10% cap were somehow enacted, what would change — and for whom? For the roughly 60% of cardholders who carry a balance month to month, the savings would be immediate and substantial. Research estimates the average saving at approximately $970 per year per cardholder. However, as analysts on both sides acknowledge, the credit card market would not remain unchanged. Likely issuer responses to a binding 10% cap would include:

• Tighter underwriting: Fewer approvals for borrowers with lower credit scores, and reduced credit limits for those who are approved.
• Elimination or reduction of rewards programmes: Particularly for lower-credit-score cardholders.
• New or higher annual fees: Issuers losing interest revenue would look to other revenue streams.
• Increased merchant fees: Some of the burden might shift through higher interchange rates, possibly flowing through to higher retail prices.

What is not contested is the scale of the current problem. Americans owe $1.28 trillion on credit cards at an average rate of 22.30%. Interest charges reached $160 billion in 2024. And the industry’s return on assets from credit cards has been increasing. The status quo is not neutral — it has clear winners and clear losers.

International Comparisons: How Other Countries Handle Credit Card Rates

The United States is something of an outlier among developed economies in its approach to consumer credit rate regulation. Currently, there is no general national cap on credit card interest rates in the US. A patchwork of state usury laws applies in some contexts, and federal law imposes caps only in narrow circumstances.

United Kingdom

The UK’s Financial Conduct Authority has imposed a pricing cap on high-cost short-term credit since 2015, and credit card companies must offer persistent-debt customers options to repay their balances more quickly. While there is no fixed APR cap on mainstream credit cards, regulators have broader powers to intervene in pricing practices.

France

French law sets a statutory usury rate — an absolute maximum APR that adjusts quarterly based on prevailing market rates. For revolving consumer credit (which includes credit cards), the usury threshold tends to be significantly lower than prevailing US card rates.

Military Lending Act (US)

The most direct US analogy to a rate cap is the Military Lending Act, which already caps APRs at 36% on many consumer credit products for active-duty servicemembers and their families. Federal credit unions are also subject to a statutory cap, currently set at 18% by the National Credit Union Administration. These examples demonstrate that rate caps, in various forms, are not incompatible with functioning consumer credit markets.

Conclusion

The credit card rate cap debate, at its core, is a story about political will, financial power, and who ultimately bears the cost of a $1.28 trillion consumer debt load.
The legislation to cap credit card interest rates at 10% has stalled in committee. The executive action pathway has been blocked by constitutional constraints and industry legal pressure. The voluntary “Trump Cards” alternative has satisfied no one except, arguably, the issuers who were never obligated to participate in the first place.
Meanwhile, the five largest card-issuing banks collected around $120 billion in credit card interest income in 2025 alone. The industry’s return on assets from credit cards has been rising. The gap between the federal funds rate and credit card APRs has widened to levels not seen in two decades. Average card rates sit at 22.30% — more than three times the average mortgage rate — and 12.4% of balances are more than 90 days delinquent.
The issuers are, by any financial metric, doing just fine.
What remains unresolved is whether “doing just fine” for the industry is compatible with “doing just fine” for the tens of millions of Americans carrying balances at rates that compound against them every month. The political energy behind the rate cap — spanning unlikely allies from Sanders to Hawley to Trump himself — suggests that this issue is not going away. But energy and legislation are different things, and so far the gap between them has remained wide.
Whether a binding rate cap ultimately passes, is watered down to a voluntary scheme, or disappears entirely in the next congressional session, the underlying facts are unlikely to change: American households owe $1.28 trillion at rates that would be considered usurious in many parts of the developed world. Someone is paying that interest. Someone else is collecting it. And the legislation designed to change that arrangement has, for now, stalled.

Frequently Asked Questions

What is the current average credit card interest rate in the United States?

As of Q4 2025, the Federal Reserve reports the average APR on credit card accounts accruing interest at 22.30%. New card offers from major issuers averaged 23.77% in early 2026.

What is S. 381, and has it passed?

S. 381 is the 10 Percent Credit Card Interest Rate Cap Act, introduced in February 2025 by Senators Bernie Sanders and Josh Hawley. As of April 2026, it has not advanced beyond committee and has not received a floor vote.

Can President Trump cap credit card rates by executive order?

No. The US Constitution grants Congress the sole power to create laws. The president cannot impose a nationwide interest rate cap without new legislation — any such executive action would face immediate and likely successful legal challenges.

How much would consumers save if a 10% cap were enacted?

Proponents estimate total savings of approximately $100 billion annually across all American credit card holders, or roughly $899 per person on average each year.

Would a rate cap eliminate credit card rewards?

For some borrowers, potentially yes. Research from Vanderbilt University found that a 10% cap would reduce rewards for cardholders with FICO scores below 760 by an estimated $27 billion annually. However, those same borrowers would save more than triple that amount in reduced interest payments.

Would a rate cap hurt lower-income borrowers?

This is the central dispute. Banks argue that rate caps would force them to deny credit to subprime borrowers. Researchers at Vanderbilt and others argue that issuers’ profit margins are thick enough to absorb the cap without dramatically restricting access, especially because interchange fee income provides a substantial non-interest revenue stream.

What is the total US credit card debt as of 2026?

According to the Federal Reserve Bank of New York, total US credit card debt reached $1.28 trillion in Q4 2025 — up $44 billion in that single quarter.

Are there existing interest rate caps on credit cards in the US?

Yes, in limited circumstances. The Military Lending Act caps APRs at 36% for active-duty servicemembers and their families. Federal credit unions are subject to a cap currently set at 18% by the National Credit Union Administration.

What are ‘Trump Cards’?

‘Trump Cards’ refers to a proposed voluntary programme floated by Trump administration officials as an alternative to mandatory rate cap legislation. Banks could choose to offer a temporary 10% rate card for one year. Critics argue this does not constitute a binding policy change and effectively lets the industry opt out of real reform.

What happens next for the credit card rate cap legislation?

As of April 2026, the bills remain stalled in committee. Continued public pressure from advocacy groups, and any renewed political push from the White House or bipartisan congressional sponsors, could revive the debate. However, without significant shifts in the congressional calculus — particularly among Senate Republicans — the legislation faces steep headwinds.

1. Congress.gov — S. 381, 10 Percent Credit Card Interest Rate Cap Act (119th Congress)
2. Congress.gov — H.R. 1944, 10 Percent Credit Card Interest Rate Cap Act (119th Congress)
3. Congressional Research Service — Interest Rate Caps on Credit Cards: Policy Issues
4. PolitiFact — Trump’s promise to cap credit card interest rates rated “Stalled”
5. Vanderbilt Law School — Bipartisan Caps on Credit Card Rates Could Save Americans Billions
6. CFPB — The Consumer Credit Card Market (Biennial Credit CARD Act Report, December 2025)
7. Morningstar — What a Credit Card Interest Rate Cap Could Mean for Investors
8. Protect Borrowers — Coalition Letter to Congress, February 2026
9. American Enterprise Institute — Should Credit Card Interest Rates Be Capped at 10 Percent?
10. Federal Reserve Bank of New York — Household Debt and Credit Report
11. Nolo — Can President Trump Legally Cap Credit Card Interest Rates at 10%?
12. SoFi — What Is the 10% Credit Card Interest Rate Cap Act?