President Donald Trump has recently announced a bold plan to cap credit card interest rates at 10%, a move that has sent ripples through the financial sector and resonated deeply with consumers nationwide. This proposal, shared via his Truth Social account, is set to take effect on January 20, 2026, and aims to remain active for one year.
What Trump’s Proposal Entails
Trump highlighted the disparity between the current average credit card interest rates—which hover around 20% and can even reach a steep 30% for low-credit-score borrowers—and his proposed ceiling. His plan seeks to alleviate these financial burdens by implementing a fairer system that ensures Americans won’t be “ripped off” by exorbitant credit card APRs.
How the Financial Markets Reacted
The news shook financial markets, triggering declines in major banking stocks during Monday’s pre-market trading:
- JPMorgan Chase shares fell by 3%.
- Citigroup dropped nearly 4%.
- Bank of America experienced a 2.45% dip.
Even payment processors like Visa (-1.58%) and Mastercard (-2%) saw their stock prices take a hit. The steepest losses included Capital One, which plummeted by nearly 9%, while American Express fell by 4.4%.
Will It Become Reality?
As promising as the proposal sounds for consumers, financial analysts argue that Trump cannot enact this policy independently. Any cap on credit card interest rates would require congressional approval, which analysts deem unlikely given current legislative dynamics. This uncertainty raises questions about whether such a move is feasible within the given timeframe.
Industry experts warn that capping rates might lead banks to tighten lending criteria, making it harder for consumers with lower credit scores to obtain credit. However, this potential vacuum could benefit alternative lenders like Affirm, SoFi, Upstart, and PayPal, as they attract more subprime customers through innovative financing solutions.
The Rise of Buy-Now-Pay-Later Options
In light of restrictive credit card policies, buy-now-pay-later services (BNPL) could gain popularity among consumers seeking flexible payment alternatives. Companies like Affirm and SoFi provide attractive solutions with competitive rates and fewer limitations, making them a viable option for those affected by traditional banks’ tightened lending practices.
If you’re looking for an alternative financial product, SoFi’s personal loans and BNPL options might fit your needs. They offer manageable payment plans and tailored solutions for improved financial well-being.
What This Means for Consumers
Trump’s announcement marks his first significant policy proposal targeting the financial sector in his presidency. While the plan could benefit consumers facing high-interest burdens, its implementation depends on navigating legislative hurdles and overcoming resistance from the financial sector. Until further developments unfold, borrowers should stay informed and explore alternative payment methods to safeguard their financial health.
