How Much Could Trump’s 10% Credit Card Cap Save You?
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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With average credit card interest rates still hovering above 20%, even modest balances can add thousands of dollars a year in unnecessary debt. A proposal floated by President Donald Trump to temporarily cap credit card interest rates at 10% has opened debate over how much relief borrowers could actually see and whether lower rates would come with tradeoffs that offset the savings.
Experts explored what a 10% credit card freeze could save the average American household.
How High Are Credit Card Interest Rates Right Now?
To understand how much a 10% credit card interest cap could save households, first, let’s look at where rates stand today and how much average credit card debt households are carrying.
First, consider that approximately 4 in 10 households carry credit card balances, according to Jennifer Tescher, president and CEO at Financial Health Network. “Our data shows that credit card debt is strongly associated with financial vulnerability, difficulty paying bills and reduced capacity to save.”
Average credit card APRs remain around 21%, according to Chris Bridges, CEO of Amara Rewards, Inc. However, some accounts can run to 23% or higher. “For a typical revolving balance near $10,800, the interest portion alone can easily be $1,000 to $2,500 per year depending on APR and payment behavior,” he said.
How Much Could a 10% Credit Card Cap Actually Save You?
With households both carrying a significant amount of credit card debt at staggering interest rates, a temporary drop from today’s rates to 10% could translate into real monthly savings, especially for households actively paying down balances.
The experts broke down what a balance paydown could look like in different amounts and time frames.
Ravi Parikh, CFO and managing director of Parikh Financial, explained that for a $5,000 card balance, interest at 24% is $100 per month. However, with a 10% credit card cap, it would be reduced to $42. This results in annual savings of $700, not small change.
The biggest impact isn’t just lower bills but faster principal reduction, which shortens payoff timelines if borrowers maintain their current payment levels.
Which Borrowers Would Benefit the Most From a 10% Cap?
Not all cardholders would see equal benefits. Those who revolve balances month to month, especially at high APRs, stand to gain the most, Parikh said. These tend to be middle-income and working-class households with moderate debt, added Abdur Rehman Arshad, CEO and financial advisor at Capidel Consulting.
Consumers who pay off balances in full or are already using promotional 0% offers would see little direct impact.
Could a Credit Card Freeze Backfire for Some Consumers?
While lower rates sound universally positive, caps can have unintended consequences.
“A blanket 10% interest cap, while appealing on the surface, could significantly reduce the number of Americans who qualify for credit cards, particularly those with lower credit scores,” Tescher said.
That’s because lenders will continue to find a way to “price risk,” Bridges said. If a credit card company can’t do that through APR, “it can price risk by denying, shrinking limits or exiting segments.”
If interest revenue comes down, issuers may look for other ways to recoup their costs elsewhere, which could mean higher fees, reduced rewards or tighter account terms, Tescher suggested.
Temporary Relief vs. Long-Term Debt Solutions
Experts emphasized that even if Trump is successful in convincing credit card companies to institute a 10% cap, it would be temporary. Without addressing spending patterns, emergency savings or principal balances, borrowers could find themselves back at high rates once the cap expires.
“A cap is an airbag, not a seatbelt,” Bridges said. “It can reduce injury in the moment, but you still need the system that prevents the crash.”
More to the point, Parikh said, while a temporary reduction can help households, “a one-year cap will not address structural debt issues.”
What Borrowers Should Do Now, Regardless of Policy Changes
Policy proposals can take time to materialize, if they do at all. In the meantime, borrowers can take concrete steps to reduce interest costs, protect credit access and improve long-term financial stability.
The best move is to reduce principal and increase optionality, Bridges said. Parikh advised considering a 0% balance transfer card to get ahead of interest and pay down existing debt.
“There needs to be a balanced approach in ensuring that households can manage credit and debt while also ensuring that credit is accessible when they need it,” Tescher concluded.
A lower rate could help in the short term, but paying down balances and reducing debt remains the most reliable way to save.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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