Will capping credit card interest rates help?

The federal cap that Trump has proposed would, in theory, prevent issuers from gouging customers. But not everyone agrees it would be good for Americans

- JEFFREY FRANKEL

FOR ONCE, US President Donald Trump put forward a proposal that appears actually to be aimed at protecting the “little guy” from predatory institutions.

His call fora one-year, 10% cap on credit-card interest rates echoes those made by many Democrats, including progressives like Senator Bernie Sanders. But given how little Trump has so far done to help workers, including his MAGA constituents, it is worth thinking through the issue afresh.

So-called usury laws, aimed at protecting borrowers from unreasonably high interest rates, have a long history. Judaism, Christianity, and Islam—the world’s three leading monotheistic religions—all condemn usury, and laws against it came to America before the United States was founded. In 1641, the Massachusetts Bay Colony set the maximum legal interest rate that could be charged on a loan at 8%.

Today, most US states have usury laws. But there is no federal law capping credit-card interest rates, and national banks can charge the maximum rate allowed in their home state. As of August 2025, Americans were paying interest of 22.83% on their credit-card balances, on average, even though the going interest rate in the economy is only about 5%.