Trump Should Hope His Credit Card Interest Cap Never Becomes Policy

By Charles C. W. Cooke

Monday, January 12, 2026

 

All that glisters is not gold.

 

If Donald Trump’s promise to institute “a one year cap on Credit Card Interest Rates of 10%” were to be measured in an opinion poll, it would likely prove extremely popular. Bolstered by the usual demagoguery, mawkishness, and indignation, the question would be abstracted into the heady realm of theory, and its opponents would be cast as the dastardly handmaidens of greed. In all probability, the public would be 80–20 in favor of the move — perhaps even more.

 

If, by contrast, Donald Trump’s promise to institute a one-year, 10 percent cap on credit card interest rates were to be implemented, it would provoke a populist backlash on a scale that we have not seen in the United States for a while. There is a reason that unsecured loans carry high rates when granted to risky debtors, and that reason does not evaporate in the face of good intentions or disgruntled rhetoric. If, in a fit of wide-eyed ideology, the president or Congress elects to change the law, they will create a set of ineluctable knock-on effects for which, before too long, they will be harshly blamed. In a matter of weeks, 80–20 would become 20–80.

 

When Trump and his acolytes imagine a 10 percent limit, they seem to envision the current system, unchanged but for that small detail. But this is absurd. Interest rates are inextricably tied to exposure. To restrict the ceiling to 10 percent APR is to inform banks that they may charge no more than 0.83 percent interest per month to anyone, irrespective of their financial history. The result of this would not be some lofty 10-percent-for-everyone paradise, but an extremely selective universe in which only the most secure candidates were accepted. Within a month of the new rules, most new applicants would be turned down, longstanding credit limits would be lowered, and existing customers who exhibited even a modest pattern of delinquency would have their accounts canceled on the spot. One does not have to try too hard to imagine how this would play out on social media, in the press, or in November’s midterm elections.

 

When one makes this argument, one is invariably accused of being a fundamentalist, or — quelle horreur! — of being “rich.” But, as it happens, my objection to this is rooted in quite the opposite experience. When I first moved to the United States, I had no credit rating and no ability to “migrate” the history that I had accrued in England into the American banking system. As such, I was caught in a Catch-22: Without credit, I could not get any of the products that would allow me to build a credit rating in the U.S., but without a credit rating, nobody would give me credit. After a few months of trying, I managed to get hold of a “secured” credit card that not only had an unusually high interest rate, but that required me to send the amount that I wished to “borrow” into an escrow account in case I defaulted on the loan. In a vacuum, such a product might well be described as “predatory.” For me, though, it was a lifeline. As a guy with no track record, no assets, a tiny income, and a visa that I could renounce at any moment, I was a considerable risk. By agreeing to the terms I was given, I was able to prove my reliability to others.

 

As it turns out, there are quite a lot of people who find themselves in the same position as I was in — among them, 18-year-olds who have never used credit, divorcees whose spouse was the sole name on their loans, entrepreneurs who have been through bankruptcy, military personnel who have spent most of their careers abroad, and many others besides. Indeed, it is rather ironic that this policy is being pushed by the Trump-Vance administration. Donald Trump is famous for being the self-described “King of Debt,” while JD Vance dedicated a whole section of Hillbilly Elegy to explaining that “powerful people sometimes do things to help people like me without really understanding people like me,” with restrictions on payday lending his primary example:

 

The senators and policy staff debating the bill had little appreciation for the role of payday lenders in the shadow economy that people like me occupied. To them, payday lenders were predatory sharks, charging high interest rates on loans and exorbitant fees for cashed checks. The sooner they were snuffed out, the better.

 

Given that payday loans are almost universally regarded as being less desirable than credit cards — and that the most likely consequence of a reduction in the availability of credit cards is an increase in the use of payday loans — one can safely assume that Vance’s argument must apply neatly against the policy that President Trump is attempting to push.

 

Still, it is tough to fight agitation with reason, and, in a democracy, it is often the case that the only sustainable way to restore good policy is to allow the public to live under the proposals that it favors. Capping credit card rates is a terrible idea, but it is a terrible idea that is now being advanced by politicians on both sides of the aisle. Good luck to whichever set of public figures becomes the face of the change — they’ll need it.