6 Ways To Take Advantage of Trump’s Proposed Cap on Credit Card Rates
Written by
Chris Adam
Edited by
Rebekah Evans
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President Donald Trump wants to make a big change to credit card rates. The President has called for a one-year cap on interest rates at 10%, starting Jan. 20.
In a TruthSocial post, President Trump said his administration is putting an end to credit card companies exploiting Americans with high interest rates of 20% to 30%.
If you’re among the many Americans carrying a balance, this proposed lower cap may sound like instant relief. In fact, some finance experts shared with GOBankingRates the following ways you can try to take advantage of such a cap.
Take Action Now
During his years in banking, Andrew Lokenauth with Fluent in Finance, said he watched thousands of clients miss the boat when rates dropped because they waited for things to happen to them instead of making things happen. According to Lokenauth, the gap between a rate change and actual benefit comes down to one thing — action before the change hits.
“Here’s what I tell people to do right now — pull your credit report today, not tomorrow,” he said. “You need a 700 [or higher] score to qualify for the best offers when caps arrive.”
Second, Lokenauth said to map your debt by interest rate so you know your numbers. Third, freeze new purchases on high-rate cards now. “When caps arrive, lenders will look at your last 90 days of behavior. Heavy spending signals risk and risky borrowers don’t get the best rates even with caps,” Lokenauth said.
Talk To Your Lender
Marcus Sturdivant Sr., managing member of The ABC Squared, advised consumers to talk to their lenders. They may offer you some alternative with a higher fee versus losing access to your credit, he added.
Pay Off Debt
“If that talk goes well, take advantage of the year cap to pay off as much debt as possible,” Sturdivant said. “If you have a major purchase you plan to make, the 10% credit card cap will put pressure on banks to offer more competitive loan rates to individual borrowers.”
Keep Your Monthly Payments on Track
“If your monthly payment gets lower because of the lower interest rate, keep paying at least what you had been paying,” said Melanie Musson, finance expert with Quote.com. “That extra money going toward principal will help you erase your debt.”
Look at Investment Opportunities
Further, according to Sturdivant, If you are an investor, this may present an opportunity to buy some of the companies potentially impacted by the cap.
“Some of these megacenter banks and credit card companies have fortress balance sheets, so they can withstand a year capped at 10% and still make profits in the long run,” he added. “The key is investing, not trading.”
Improve Your Financial Well-Being
“If you have credit card debt, use this relief to jumpstart your financial well-being. Start keeping a budget. Start saving. Start paying off debt. Let the relief keep you motivated,” Musson added.
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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