NEW YORK (AP) — President Donald Trump announced intentions to cap credit card interest rates at a maximum of 10% for one year, fulfilling a campaign pledge aimed at alleviating American financial burdens. According to research, this move could potentially save American consumers around $100 billion annually on credit card interest. The timing of the proposal is significant as it seeks to take effect on January 20, 2024, coinciding with the anniversary of Trump's inauguration. Despite its consumer-friendly intent, the proposal has already stirred up strong resistance from Wall Street and key financial players in the credit card industry, who have previously backed Trump with substantial campaign donations.
Trump's announcement, made on his social media platform, criticized current high-interest rates that range from an average of 19.65% to 21.5%. He stated, We will no longer let the American Public be ripped off by Credit Card Companies that are charging Interest Rates of 20 to 30%. While Trump did not clarify if the cap would be enacted via legislation or executive order, Senator Roger Marshall, a Republican, indicated he would work on drafting a bill with the president's backing.
Although capping interest rates could inflict significant revenue losses on credit card companies, research suggests the industry would remain profitable, while customer rewards may be reduced. The American Bankers Association has expressed disapproval, arguing that the cap would push consumers toward less regulated, more expensive options.
Historically, Trump's administration has been friendly towards the credit sector, with recent mergers and a general pattern of deregulation favoring big banks. Yet, lawmakers including Senators Sanders and Hawley have introduced legislation supporting Trump's proposal to cap interest rates further. As the debate unfolds, it remains to be seen how this proposal will impact both consumers and the financial sector.
Trump's announcement, made on his social media platform, criticized current high-interest rates that range from an average of 19.65% to 21.5%. He stated, We will no longer let the American Public be ripped off by Credit Card Companies that are charging Interest Rates of 20 to 30%. While Trump did not clarify if the cap would be enacted via legislation or executive order, Senator Roger Marshall, a Republican, indicated he would work on drafting a bill with the president's backing.
Although capping interest rates could inflict significant revenue losses on credit card companies, research suggests the industry would remain profitable, while customer rewards may be reduced. The American Bankers Association has expressed disapproval, arguing that the cap would push consumers toward less regulated, more expensive options.
Historically, Trump's administration has been friendly towards the credit sector, with recent mergers and a general pattern of deregulation favoring big banks. Yet, lawmakers including Senators Sanders and Hawley have introduced legislation supporting Trump's proposal to cap interest rates further. As the debate unfolds, it remains to be seen how this proposal will impact both consumers and the financial sector.
