I came across a Newsmax article the other day with a headline that actually made me stop scrolling, which doesn’t happen often anymore. President Trump floating the idea of capping credit card interest rates at 10% for a year. Not 18 percent. Not 24 percent. Not the ridiculous 29.99 percent rates so many people are quietly stuck paying. Ten percent.
Why This Idea Caught My Attention
Predictably, the banks are unhappy about it, and whenever that happens my first instinct is that the idea might be worth taking seriously. This post really isn’t about Trump himself, though his name is obviously tied to the story. It’s more about debt, interest, incentives, and a system that has never fully made sense to me the longer I’ve lived with it.
Credit Cards as a Quiet Tax on Being Broke
Credit cards have slowly turned into a quiet tax on being broke. Americans are now carrying more than $1.2 trillion in credit card debt, with the average household owing over $9,000. That number isn’t driven by luxury spending or reckless splurges. A lot of people are using credit cards for groceries, gas, and basic living expenses. These aren’t wants, they’re necessities.
At the same time, interest rates have crept into absurd territory. The average rate is hovering around 23 percent, and plenty of people are paying closer to 30 percent. When you run the math, a massive chunk of monthly payments never touches the principal. It just feeds interest. You can make payment after payment and barely see the balance move. That isn’t a flaw in the system, it is the system.
The Logic That Never Quite Added Up
The part that has never made sense to me is how banks justify this setup. We’re constantly told that interest rates are about risk. The riskier the borrower, the higher the rate. On paper, that sounds logical. In real life, it falls apart pretty quickly.
If someone is already struggling financially, already living paycheck to paycheck, already carrying the scars of past mistakes on their credit report, why would you make their situation harder? Why would you raise their monthly payment? Why would you make default more likely instead of less? Charging a higher rate to someone who can least afford it feels backwards when you actually think it through.
Flip the logic around for a second. If you gave that same borrower a lower, more affordable rate, their chances of repaying the debt would improve. Lower payments mean less stress, more flexibility, and a better chance of staying current. Instead, the system rewards people who are already doing well and punishes people who are already behind.
Good credit gets you a decent rate. Bad credit gets you a brutal one. That isn’t risk management, it’s stacking the deck in a way that almost guarantees failure for the people who need the most help.
What Critics Say Will Happen
Critics of a 10 percent cap argue that banks will simply stop lending to higher-risk borrowers altogether. Credit access will shrink. Some people won’t qualify for credit cards at all. This is framed as a disaster scenario, but I see it very differently.
Honestly, that outcome might be a good thing. Some people should not be borrowing money in the first place, and I don’t say that from a position of judgment. I say it as someone who has listened to thousands of hours of Dave Ramsey over the past few decades and watched the same patterns repeat over and over again. Debt rarely fixes a problem. Most of the time, it just delays it and makes it worse.
When high interest credit is removed from the equation, people are forced to find other solutions. Budgeting, earning extra income, selling unused stuff, negotiating bills, or asking for help are all harder than swiping a card, but they are real solutions. Debt feels easy in the moment, right up until it becomes a permanent weight dragging everything down.
If a 10 percent cap means that some high-risk borrowers can no longer get credit cards, that might be the best thing that ever happens to them financially. No more minimum payments that go nowhere. No more watching interest eat their income alive. No more false sense of progress.
The Ripple Effects Nobody Seems to Talk About
Zooming out, there’s a bigger economic effect that rarely gets discussed. When people stop sending enormous chunks of their income to banks in the form of interest, that money doesn’t disappear. Over time, it stays in their pockets. As stability improves, so does their ability to participate in the real economy.
People with money left over spend it on goods, services, and experiences. They support local businesses. They create demand that actually leads to jobs and growth. Meanwhile, borrowers who still qualify for credit benefit from lower interest rates, which again means more disposable income and less financial pressure.
This isn’t complicated economics. Less money siphoned off by interest means more money circulating in local economies, where it actually does some good.
The Myth That Banks Won’t Survive
There’s also this persistent idea that banks won’t survive if they can’t charge outrageous rates. That argument doesn’t hold up very well. Banks borrow money from the Federal Reserve at rates far lower than what they charge consumers. Even at a 10 percent cap, the margins are still healthy.
Major credit card issuers report billions in profit every year. They will survive just fine. They might even have to skip buying the naming rights to the next shiny sports stadium or slap their logo on one fewer major sporting event, which honestly sounds like a breath of fresh air. We’re not talking about banks going under. We’re talking about them making slightly less extreme profits. That feels like a reasonable tradeoff if it means consumers aren’t trapped in perpetual debt.
How Credit Cards Slipped Through the Cracks
It’s also worth pointing out that interest rate caps are not some radical new idea. Usury laws have existed for centuries for a reason. Most states already limit excessive interest in one form or another. Credit cards managed to avoid many of these limits through legal loopholes and friendly jurisdictions. Ever notice how your credit card statements always seem to come from Delaware? That’s not a coincidence. Delaware loosened its usury laws decades ago, allowing banks based there to charge whatever rates they wanted nationwide, effectively sidestepping the interest limits most states still enforce.
A temporary cap isn’t an attack on capitalism or free markets. It’s a recognition that markets don’t self-correct when the incentives reward harm. Sometimes guardrails are necessary.
Why This Actually Helps People Long Term
After decades of listening to financial advice and watching how people actually live, one thing is clear to me. Debt does not build wealth. It never has. Avoiding debt, earning more, saving consistently, and owning things outright are what lead to long-term stability.
Credit cards often create the illusion of progress while quietly working against the person using them. Lower interest rates reduce that damage. Removing access to harmful credit altogether reduces it even more.
My Take on How This Plays Out
If legislation like this ever passes, I think we’ll eventually look back on it as a net positive. Not because it makes borrowing cheaper for everyone, but because it makes borrowing harder for people who are most likely to be hurt by it.
Sometimes protecting consumers means protecting them from bad options. If fewer Americans are buried under compounding interest, that’s good for families, good for mental health, and good for the economy. The banks will adapt, because they always do. The rest of us might finally get a fairer deal.