A contentious debate is brewing following a proposal tabled in the US House to cap credit card interest rates at 10%. The bipartisan measure, spearheaded by Reps. Alexandria Ocasio-Cortez and Anna Paulina Luna, seeks to protect working families from what they describe as “endless cycles of debt” perpetuated by exorbitant interest fees.
Companion legislation in the Senate, introduced by Sens. Bernie Sanders and Josh Hawley, also underscores the bipartisan nature of this push.
“Credit cards with high interest rates regularly trap working people in endless cycles of debt,” stated Ocasio-Cortez in a press release. Proponents argue that limiting rates to 10% would force banks to reassess their profit models and reduce what they call predatory practices.
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The idea echoes President Donald Trump’s talking point during his campaign rally in New York in September.
“Capping credit card interest rates at 10%, just like President Trump campaigned on, is a simple way to provide meaningful relief to working people,” Hawley said.
Americans are grappling with overwhelming credit card debt, which now exceeds a trillion dollars in total, according to the Federal Reserve Bank of New York.
However, critics of the legislation caution that such a cap could have unintended consequences for financial inclusion. Spencer Hakimian, Founder of Tolou Capital Management, argued that the banking system’s profitability depends on charging higher interest rates to offset losses incurred from a small percentage of delinquent accounts.
“Banks exist to make a profit. They are not charities,” Hakimian wrote, adding that capping interest rates could result in banks withdrawing credit offerings from individuals deemed higher risk, including young people and those with low credit scores.
“Capping interest only hurts the poorest and most vulnerable,” he said.
In January 2025, LendingTree reported that the average credit card APR was 24.26%. Nearly half of cardholders carry a balance each month, and in 2022, companies charged over $105 billion in interest plus more than $25 billion in fees, according to a Consumer Financial Protection Bureau study.
A recent LendingTree survey shows that 77% of Americans support an interest rate cap on credit cards, down from 80% in 2022 and 84% in 2019.
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