7:45 PM IST – In the United States, credit card interest rates have quietly turned into a major economic and political issue.
President Donald Trump most recently raised this issue on Friday, January 9, 2026, through a post on Truth Social. In his statement, Trump called for a temporary, one-year cap on credit card interest rates at 10%, arguing that current rates charged to consumers are “a ripoff.”
According to Reuters, Trump proposed that the cap should take effect from January 20, 2026, aligning with the one-year anniversary of his second administration. He said interest rates ranging between 20% and 30% or more are excessive and unfair for ordinary Americans already struggling with rising living costs.
What Trump is proposing — key facts
Trump’s proposal includes:
- Interest rate cap: Maximum 10% APR
- Duration: One year (temporary)
- Target: Credit cards currently charging 20%–30%+
- Objective: To improve affordability and reduce pressure on households facing record consumer debt
While Trump first mentioned the idea during his September 2024 campaign, the January 2026 statement has brought the issue back into focus.
The broader US policy context
The idea of capping credit card interest rates is not new in the US.
As reported by The Guardian, bipartisan efforts already exist in Congress. Lawmakers from opposite ends of the political spectrum — including Bernie Sanders and Josh Hawley — have previously introduced proposals such as the 10 Per cent Credit Card Interest Rate Cap Act.
However, experts note that Trump’s proposal is not a law. Any such cap would require Congressional approval, and the US banking industry has openly opposed interest-rate ceilings, arguing they could restrict access to credit.
Why the debate is happening now — real numbers
The timing of Trump’s statement is closely linked to America’s rising household debt.
Data from the US Federal Reserve shows that US consumers are carrying more than $1 trillion in credit card debt, the highest level ever recorded. At the same time:
- The average US credit card interest rate exceeds 20%
- Many popular cards charge 25% to 30% APR
Even small unpaid balances can grow quickly, turning everyday expenses into long-term debt.
Following Trump’s remarks, financial markets reacted cautiously. Bank and credit-card issuer stocks dipped as investors assessed the risk of lower interest income if a cap were ever implemented.
So if a 10% cap is just talk for now in the US, why are Indian credit card interest rates much higher? It goes around 30% and 48% per annum, even though incomes are generally lower here?
Why India’s Rates Are Higher — Simple Numbers
In India, most banks and card issuers charge around 2.5% to 3.5% per month on unpaid credit card balances. When annualised, this becomes 30–42% APR — significantly higher than both the proposed US cap and current average US card rates.
Here’s a simple example many Indians can relate to:
Imagine you are in a Tier-2 or Tier-3 city like Jaipur, Surat, Kanpur, or Mysore. You swipe your credit card for ₹40,000. You are unable to pay the full bill on time.
At 36% annual interest, you are charged roughly:
- ₹1,200 per month in interest (before fees)
- Plus late fees and GST, which can push the bill up fast
Before you know it, a ₹40,000 purchase can turn into a ₹50,000 or ₹60,000 obligation if not managed carefully.
Why RBI Doesn’t Cap Credit Card Rates
Unlike the US discussion about a 10% cap, the Reserve Bank of India (RBI) does not impose a fixed cap on credit card interest.
Instead, RBI focuses on:
- Transparent disclosure of interest rates
- Fair billing practices
- Rules that protect consumers from hidden charges
Why no cap?
- Credit card debt is unsecured, and banks take more risk.
- Defaults are higher among first-time or low-income borrowers.
- Banks price interest based on risk profile and customer history.
If RBI suddenly forced an interest cap (say at 10–15%), banks might respond by:
- Tightening credit approvals
- Cutting rewards and EMI options
- Reducing credit limits — especially for users in smaller cities
Could India Ever Follow the US?
In simple words, it’s unlikely in the short term.
India’s banking and credit system is different from the US. Many people in smaller cities and towns get their first taste of formal credit through cards. A strict cap without broader credit reforms could shrink credit access instead of helping consumers.
Final Takeaway
Trump’s suggestion of a 10% credit card interest cap grabbed headlines in the US, but it is still just a proposal. In India, high interest rates reflect risk, regulation style, and market economics — not neglect or unfairness.
For Indian consumers, the smartest practice is simple:
Use credit cards wisely, pay on time, and avoid carrying large balances.
