US President Donald Trump has called for a one-year cap on credit card interest rates at 10% starting on January 20 but did not provide details on how his plan will come to fruition or how he planned to make companies comply.
Trump also made the pledge during the campaign for the 2024 election he won, but analysts dismissed it at the time, saying such a step required congressional approval.
Legislators from the Democratic and Republican parties have raised concern about high rates and have called for those to be addressed. Republicans currently hold a narrow majority in the Senate and the House of Representatives.
There have been some legislative efforts in Congress to pursue such a proposal, but they are yet to become law, and in his social media post Trump did not offer explicit support to any specific bill.
Opposition legislators have criticised Trump, a Republican, for not having delivered on his campaign pledge.
“Effective January 20, I, as president of the US, am calling for a one-year cap on credit card interest rates of 10%,” Trump wrote on Truth Social, without providing more details.
“Please be informed that we will no longer let the American public be ‘ripped off’ by credit card companies,” Trump added.
US Senator Elizabeth Warren, a Democrat in the Senate banking committee, said Trump’s call was meaningless without a bill being passed by Congress.
“Begging credit card companies to play nice is a joke. I said a year ago if Trump was serious, I’d work to pass a bill to cap rates,” Warren said, while criticising Trump’s attempts to gut the US Consumer Financial Protection Bureau.
The White House did not immediately respond to a request for comment on details of the call from Trump but said on social media, without elaborating, that the president was capping the rates.
Some major US banks and credit card issuers, such as American Express, Capital One Financial Corp, JPMorgan, Citigroup and Bank of America, did not respond to a request for comment.
Some banking advocacy groups said in a joint statement that a 10% interest rate cap would “reduce credit availability” and “only drive consumers towards less regulated, more costly alternatives”.
The statement came from the Consumer Bankers Association, Bank Policy Institute, American Bankers Association, Financial Services Forum and Independent Community Bankers of America.
US Senator Bernie Sanders, a fierce Trump critic, and Senator Josh Hawley, who belongs to Trump’s Republican Party, have previously introduced bipartisan legislation aimed at capping credit card interest rates at 10% for five years. This bill explicitly directs credit card companies to limit rates as part of broader consumer relief legislation.
Democratic US Representative Alexandria Ocasio-Cortez and Republican Congresswoman Anna Paulina Luna have also introduced a House of Representatives bill to cap credit card interest rates at 10%, reflecting cross-aisle interest in addressing high rates.
Billionaire fund manager Bill Ackman, who endorsed Trump in the last elections, said on X the president’s call was a “mistake”.
Last year, the Trump administration moved to scrap a credit card late fee rule from the era of former president Joe Biden.
The Trump administration had asked a federal court to throw out a regulation capping credit card late fees at $8 (R131.94), saying it agreed with business and banking groups that alleged the rule was illegal. A federal judge subsequently threw out the rule.
Reuters
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