Trump’s Rate Cap: A Lifeline or a Trap?

Even supporters are questioning the mechanics of Donald Trump’s new 10% cap on credit card interest rates. Investor Bill Ackman, a Trump ally, called the president’s goal of reducing rates a “worthy and important one,” but warned that the proposed method is flawed. Trump announced the cap on Truth Social, stating it would take effect on January 20 to stop the “ripping off” of consumers.
Ackman’s concern is that a hard cap ignores the reality of risk pricing. He explained that if banks cannot charge higher rates to riskier borrowers, they will simply stop lending to them. This creates a situation where the cap exists, but no one can get a card. Ackman predicted that the policy would lead to mass card cancellations, hurting the very people Trump wants to help.
The banking industry agrees. In a joint statement, major financial associations warned that the cap would “reduce credit availability” and drive consumers toward less regulated alternatives. They argued that the policy would be devastating for small business owners and families who rely on credit cards for liquidity.
Senator Elizabeth Warren also criticized the move, calling it a “joke” without legislative action. She argued that Trump is offering a simplistic solution to a complex problem, and that his lack of a concrete plan makes the announcement meaningless. Warren challenged the president to work with Congress to pass real reform.
Despite the criticism, the proposal has struck a chord with voters. Senator Josh Hawley called it a “fantastic idea,” highlighting the widespread frustration with high interest rates. As the January 20 deadline looms, the clash between worthy goals and market realities is set to define the debate.