Four-Fifths of Credit Card Accounts Could Vanish Under Trump’s Rate Cap, Experts Say

President Donald Trump’s call to cap credit card interest rates sounds like relief for millions of Americans paying twice that or more. But industry analyses suggest such a policy would mean up to 80% of credit card accounts could disappear altogether, cutting off the borrowers it’s meant to help.

Consumer advocates say the frustration behind the idea of capping interest is real. But banks and credit unions warned that a hard cap could force lenders to pull back from anyone without pristine credit, leaving millions with fewer options, not cheaper ones. Millions of others could lose access to rewards “points” and other benefits, experts say, as banks scale back to make up for lower interest revenue

So, what’s next? Trump on Friday called for a cap that would take effect Jan. 20. “We will no longer let the American Public be ‘ripped off’ by Credit Card Companies that are charging Interest Rates of 20 to 30%,” he said on Truth Social.

We take you through the likelihood of the proposal’s enactment and what it could mean for Americans’ finances below.

Obstacles to Trump’s Proposal

The average credit card APR has climbed to 21%, almost double what it was a decade ago, and Americans now owe a record $1.23 trillion on their cards. The idea of capping rates, meanwhile, has some bipartisan appeal. Sens. Bernie Sanders and Josh Hawley introduced legislation last year that calls for a similar cap.

“There’s a recognition that affordability is on the minds of leaders across the spectrum,” Adam Rust, director of financial services at the Consumer Federation of America, told Investopedia.

But Trump’s doesn’t appear to have the legal authority to mandate the cap. And lenders claim the math doesn’t work if the goal is to offer cards widely at a 10% APR.

The Legal Situation

Interest-rate caps are set at the state level. A 1978 Supreme Court decision, however, allows nationally chartered banks to charge their home state’s interest rates, no matter where you live.

There is no national cap on interest rates, and a nationwide ceiling on how much lenders can charge, like Trump is calling for—”would require an act of Congress,” the Congressional Research Service wrote in May 2025.

Hawley, a Missouri Republican, called Trump’s proposal a “fantastic idea” on the social media platform X. But in a statement to Investopedia, he said Congress “should pass my bipartisan bill to cap these rates and deliver relief right away.”

The process, all told, wouldn’t happen that quickly, experts say. “It would be challenged in court, inevitably,” Rust said. “All of that suggests that this isn’t something that will happen by Jan. 20. It’ll take years.”

What Would Happen to Your Credit Cards?

Few people currently pay an APR of just 10% on their credit cards. A Vanderbilt Policy Accelerator analysis found that even those with an 850 FICO score pay average APRs above 12%.

An Electronic Payments Coalition study of the Missouri market argued that more than 80% of credit card accounts could lose access under a 10% cap, with many accounts with credit scores below 740 shut out as card issuers determine that lower-credit customers aren’t worth the risk at capped rates. About 37% of consumers with credit scores fall into subprime or near-prime territory—scores below 660—according to VantageScore’s November 2025 data.

Banks might not flee the market, according to Rust, who said interchange, penalty and other fees can still make credit-card issuing profitable. Credit card lending earns a return on assets more than four times the banking industry average, according to a Federal Reserve Bank of New York study.

Plus, he argued, credit card companies could cut back on the credit available to Americans without impacting as many people as company reports make it seem, with consumers having far more in unused credit than revolving debt.

“There’s plenty of room for a slight pullback in credit availability without compromising the amount of credit people want to use,” he said.

The Savings a 10% APR Could Provide

For those who could keep their cards after a 10% rate cap, the savings could be substantial.

A household carrying the national average balance of $11,019 in credit card debt at today’s 21% APR would save about $1,100 a year at 10%. The Vanderbilt Policy Accelerator said that Americans overall would lose $27 billion in rewards—cash back, points, travel miles—though the average borrower would save about $3 in interest for every $1 lost in points.

But the people who’d benefit most are the same ones most to lose access. Industry estimates suggest that most borrowers with a credit score below 740 could see their cards canceled or their limits slashed.

Any cap “will affect people who are revolving”—carrying debt month to month—”and that is primarily working-class and middle-class consumers,” Rust said. “People at the top of the spectrum are typically going to be paying their balances in full.”

While the Vanderbilt analysts estimate a 10% cap would save American consumers $100 billion annually in interest payments, they concluded such a cap would cut off borrowers with scores below 600. A 15% cap, the study found, might thread the needle.

“The rate doesn’t have to be 10% to make a difference,” Rust said. “It could be something that’s higher but still reasonable, leading to real benefits for a lot of people.”

For those who lose their cards, if banking and credit union industry representatives are correct, the alternatives may be even less palatable: payday lenders charging 400% APR, pawn shops, or unregulated online lenders.