America is addicted to debt and the interest bill is getting uglier.
The average U.S. credit card interest rate is now around 21%, and President Trump is floating a one-year cap that would slash that number to 10%. It’s an idea that sounds consumer-friendly on paper, but would blow up a major profit engine across consumer finance if it ever became real.
America’s Debt Tab Keeps Climbing
The U.S. is running up the scoreboard across the board.
The federal government owes roughly $38 trillion
Total household debt has climbed above $18 trillion, per the Federal Reserve Bank of New York
About 70% of household borrowing is mortgage-related
But the fastest-growing headache is revolving credit. U.S. credit card debt has now ballooned past $1.2 trillion, and borrowers are paying the price through the nose as rates have surged over the last few years.
Trump’s New Target: Credit Card APRs
Over the weekend, Trump went after banks and credit card companies on social media, saying Americans are getting “ripped off” and proposing a one-year cap that would limit credit card interest rates to 10%.
Markets immediately treated it like a threat. Stocks tied to credit card spending and consumer lending sold off, including:
Visa $V ( ▼ 1.88% )
Mastercard $MA ( ▼ 1.61% )
Capital One $COF ( ▼ 6.42% )
It’s a reminder that the consumer credit machine is not just a household issue. It’s a major piece of the U.S. financial system.
A Cap Would Reshape Lending Overnight
A 10% ceiling would be a seismic change. Credit card APRs aren’t high because banks are bored, they’re high because lenders price risk aggressively, especially for lower credit scores.
If banks can’t charge higher rates for riskier borrowers, they likely respond by:
cutting off credit to lower-income consumers
increasing fees
tightening approval standards fast
The unintended consequence is that vulnerable borrowers could get pushed toward unregulated lenders, which tends to mean worse terms, less protection, and more financial stress.
Congress Is the Wall
For now, most analysts think the plan goes nowhere.
Jefferies analysts said there is no executive authority to impose such a cap, meaning Trump can’t simply decree it into existence. It would require Congress to pass legislation, which remains unlikely.
But traders are still reacting as if some probability exists, and that’s enough to pressure stocks in the space and inject uncertainty into consumer finance.
Bottom line: the politics are obvious, but the economics are brutal. Cutting credit card APRs in half sounds great until the credit itself disappears.