"Americans Are Getting RIPPED OFF!" - Trump Vows To DESTROY Credit Cards
TL;DR
Trump's proposal to cap credit card interest rates at 10% appeals to voters burdened by debt, but experts warn it would destroy the unsecured lending model by forcing banks to deny credit to risky borrowers and slash existing credit limits.
🏛️ The 10% Cap Proposal 2 insights
Trump's populist promise
Trump proposed a one-year 10% cap on credit card interest rates, citing abuse by companies charging 28-30% and claiming consumers are unaware of the true costs.
Legal and mathematical barriers
The President lacks unilateral authority to set rates, and unsecured debt mathematically cannot sustain 10% returns given high default rates and the lack of collateral.
📉 Market Distortions & Consequences 3 insights
Mass exclusion of borrowers
Capping rates at 10% would force issuers to immediately cancel cards for anyone with imperfect credit or thin files, denying access to roughly half the population who currently qualify for higher-rate products.
Credit contraction across the board
Banks would slash existing credit limits and cancel unused accounts to reduce liability exposure, similar to the widespread limit reductions seen during the 2020 economic downturn.
Death of rewards programs
Current cash-back and points programs are subsidized by interest payments from balance carriers; a 10% cap would eliminate the profit margin required to fund these perks.
💳 The Debt Crisis Reality 3 insights
Persistent delinquency surge
61% of cardholders carrying balances have remained in debt for over a year, up from 53% in late 2024, indicating systemic reliance on high-cost borrowing.
Industry profit margins
Visa nets 47-52% profits, Mastercard 45%, and Amex 14-20%, margins that would be impossible under a 10% cap once accounting for defaults where debt sells for pennies on the dollar.
Literacy over legislation
Experts suggest requiring applicants to pass basic financial literacy tests covering interest calculations and minimum payments before approval, rather than imposing price controls that distort markets.
Bottom Line
Avoid carrying credit card balances entirely to escape the interest trap, as government price controls would likely reduce credit availability for the very people they aim to help while eliminating rewards for responsible users.
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