Recent economic reports reveal that the US administration has begun taking concrete steps to study President Donald Trump's proposal to cap interest rates on credit cards, a move aimed at easing the financial burden on American citizens. According to Bloomberg, citing informed sources, the White House is currently considering executive action to implement this proposal, which sets the interest rate cap at 10%.
The report indicated that the plan is still in its initial drafting stages, with US administration officials holding intensive discussions with banking sector leaders and members of Congress to determine implementation mechanisms and necessary conditions. This move is part of a broader administration campaign to reduce the cost of living and combat inflation, which has directly impacted Americans' purchasing power.
Proposal details: 10% for one year
This move stems from a post by President Donald Trump on the Truth Social platform, in which he explicitly called for capping credit card interest rates at 10% for one year, effective January 20. Trump emphasized in his post, "As President of the United States, I am calling for a 10% cap on credit card interest rates for one year," adding firmly, "Please be advised that we will no longer allow credit card companies to take advantage of the American people.".
Economic context and current interest rates
To understand the significance of this decision, one must consider the current state of the US credit market. Economic data indicates that average annual interest rates on credit cards in America have reached record highs, often exceeding 20% and reaching 25% or more for some categories. This significant increase is a result of a series of Federal Reserve interest rate hikes over the past few years aimed at curbing inflation, making borrowing prohibitively expensive for the average consumer and leading to unprecedented levels of household debt in the US.
Challenges and expected impacts
This proposal is expected to face strong resistance from the banking sector and financial institutions, which rely heavily on interest income to cover lending risks and generate profits. Economists believe that forcibly reducing interest rates to 10% could lead banks to tighten lending standards, potentially making it more difficult for low-income individuals or those with low credit ratings to obtain new credit cards.
On the legislative front, implementing this decision via an executive order presents a legal challenge, as radical changes to monetary policy typically require congressional approval. However, the mere discussion of the idea places significant political pressure on financial institutions to offer concessions or compromises to ease the burden on consumers, making the coming weeks crucial in determining the course of this complex economic issue.
