Trump wants to cap credit card interest rates at 10%. But such limits could harm consumers, experts warn

Core Viewpoint - Credit cards serve as both a financial tool and a potential debt trap for consumers, with rising interest rates exacerbating the situation for those who carry a balance [1][2]. Group 1: Interest Rates and Legislative Actions - The average annual percentage rate (APR) on U.S. credit cards has increased from less than 15% four years ago to over 21% in 2024, with some consumers facing rates exceeding 30% [2]. - President Donald Trump has proposed a one-year cap on credit card interest rates at 10%, effective January 20, following a similar bill introduced by Senators Bernie Sanders and Josh Hawley that aimed to cap rates at 10% for five years [2][3]. Group 2: Industry Implications and Concerns - High interest rates on credit cards are viewed by some lawmakers as extortionate, with the intention of the proposed legislation being to reduce profits from credit card lending and provide relief to working families [4]. - Experts warn that imposing a cap on credit card interest rates could lead to unintended consequences, potentially harming those it aims to help by reducing access to credit and undermining credit card rewards programs [5]. - The ability of banks to charge rates based on the risk profile of cardholders is crucial; limiting this could disrupt the credit card industry significantly [6][7].