Former President Donald Trump proposed capping annual credit card interest rates at a maximum of 10% during a campaign stop on Long Island Wednesday night, prompting banking groups to dismiss the plan as the Republican version of Democrat Kamala Harris’ widely criticized “price controls.”
“While hard-working Americans are catching up, we’re going to put a temporary cap on credit card interest rates,” Trump told a raucous crowd of about 16,000 at the Nassau Coliseum as he outlined his economic plan. “We’re going to put a cap on it at about 10%. We can’t let them make 25 or 30 percent.”
The average interest rate on credit cards was 21.5% last May, according Data provided by the Federal Reserve. Rates had been rising since early 2022 amid red-hot inflation stemming from the COVID-19 pandemic.
Credit card interest rates have never dipped below 10% in the Federal Reserve's data set, which dates back to 1994.
But critics warned that Trump's plan would do more harm to those it claimed to help.
“Government-imposed price controls on credit card interest rates would hurt all cardholders, especially the lowest-income Americans who these measures are intended to help,” a banking industry insider at the Consumer Bankers Association told The Post on Thursday.
“This will result in credit cards only being issued to consumers with high incomes and credit scores who represent a low risk to card issuers.”
Peter Schiff, chief economist at Euro Pacific Asset Management, argued that “Trump has just proposed his own version of price controls.”
“That would destroy the industry and millions of Americans would lose their credit cards,” he added. “There are huge losses on credit cards from people who don’t pay. That’s why they need the high interest rates to offset that. There’s also a lot of fraud.”
Trump and his allies criticized Harris after she unveiled a plan to crack down on so-called price gouging in the food industry last month.
The 45th president called her “Marxist” and suggested that her proposal was “communist” in practice.
In 2019, several politicians, including Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) He supported a measure to limit credit card interest payments at 15%.
“We have opposed similar interest rate cap proposals in the past,” said a spokesman for the American Bankers Association, an industry group representing banks and their employees nationwide.
“These changes would result in the loss of credit for the consumers who need it most, forcing them to turn to less regulated and riskier alternatives, such as payday lenders and loan sharks.”
The Trump campaign did not immediately respond to a request from The Post for clarification on how it would implement a cap on credit card rates.
Before the Long Island rally, Trump also promised to drastically reduce the price of car insurance.
“His car insurance has gone up 73%. VOTE FOR TRUMP AND I’LL CUT THAT AMOUNT IN HALF!” he posted on X.
On Wednesday, Federal Reserve Chairman Jerome Powell announced the first major rate cut since the start of the COVID-19 pandemic.
As he had previously hinted, Powell opted to go big and cut the Fed's benchmark interest rate target by as much as 50 basis points (half a percentage point) to a range between 4.75% and 5%, down from 5.25% to 5.50%.
The Federal Reserve's benchmark rate is closely watched because it can affect other key interest rates.
