10% credit card APR cap would harm consumers
President Donald Trump Friday night posted on Truth Social that he intends to cap credit card interest rates at 10% for one year, effective Jan. 20.
The president made additional comments Sunday night, where he said credit card companies who do not impose a 10% cap would face legal action. No formal actions have yet been made to require this.
America’s Credit Unions wrote to the president over the weekend, detailing why such a cap would reduce access to credit and harm consumers.
“Credit unions were founded as the original consumer protectors, and that mission still shows up in the real-world value they deliver every day. Their members consistently benefit from the lowest rates in the marketplace, roughly half the average APR charged by other issuers, which translates into meaningful, measurable savings for working families. That’s affordability people can feel in their financial well-being,” said America’s Credit Unions President/CEO Scott Simpson. “A 10% interest rate cap would be devastating for credit union members. While we appreciate the President's desire to increase affordability, the plain truth is that capping rates at 10% does not make credit more affordable, it makes it unattainable for millions of working Americans because financial institutions will not be able to offer credit cards to most consumers at a 10% rate. We will continue to work to ensure this policy does not harm the very people the President intends to protect.”
The letter emphasizes a cap would mean:
- An estimated two-thirds of credit card users carrying a balance would have their credit lines reduced or eliminated.
- Virtually all of the 47 million Americans with a sub-prime credit score would be unable to obtain or keep a credit card;
- Lenders, including many credit unions, would have to raise fees or launch new service charges to cover costs and manage risk;
- Retailers and small businesses on Main Street would see sales decline when customers can no longer use their cards or have lower credit limits; and
- Less access to credit for millions of hardworking Americans, including teachers, small business owners, members of the military, and farmers, creating a contraction in consumer spending that harms the broader economy.
Instead of this cap, America’s Credit Unions encourages a focus on “targeted, data-driven solutions that truly help consumers in need without negative side effects,” including supporting financial education and budgeting resources, expanding access to nonprofit debt counseling, encouraging refinancing opportunities for high-interest debt, and promoting the availability of lower-rate credit options, such as those offered by credit unions.
America's Credit Unions successfully advocated against legislative efforts to place a 10% cap on credit card rates, and kept rate cap provisions out of the GENIUS Act. Data from the credit card marketplace shows that credit unions consistently offer lower credit card rates than banks, due to their cooperative structure.
America's Credit Unions will continue to engage with the administration and Congress to emphasize how cooperative finance supports consumers' financial well-being.