The Proposed 10% Interest Rate Cap — What’s Really Going On?

The Proposed 10% Interest Rate Cap — What’s Really Going On?

Over the past few weeks, many of us have heard that credit card interest rates might soon be capped at 10%. The announcement generated excitement, confusion, and a lot of questions, especially for people struggling with 20–30% APRs on their existing credit card balances. So, what is happening? And what does it mean for consumers in general?

Here’s a clear breakdown of where things stand today.

What Sparked All the Confusion?

On January 9, 2026, President Trump announced that credit card companies should cut their interest rates to 10% starting January 20, calling it a one-year cap aimed at stopping Americans from being “ripped off,” (Truth Social, 15 January 2026)

However, this announcement was not paired with any law, rule, or executive order requiring credit card companies and lenders to comply. Because of that, no major credit card issuer has reduced rates, and industry experts report “not one whisper” of any card company honoring the request, (USA Today, 20 January 2026).

Inside the financial counseling field, the announcement created immediate concern. The National Foundation for Credit Counseling (NFCC) warned agencies, including ours, that the proposal had “created a new level of confusion” for consumers who may incorrectly assume help is on the way and delay seeking counseling.

Is Congress Actually Considering a Cap?

Yes, but it’s early.

A bipartisan bill, S.381 – The 10 Percent Credit Card Interest Rate Cap Act, was actually introduced in February 2025.

If passed, it would:

• Cap credit card APRs at 10%.
• Penalize lenders who violate the cap by forcing them to forfeit interest.
• Allow consumers to sue for illegal interest.
• Sunset (begin phasing out) the cap in 2031.

Current bill status:

Right now, the bill stands as “Introduced.” It has not moved out of committee, been debated, or voted on. In other words, there is no active legislation, close to becoming law, right now.

Why Card Companies Are Not Complying

This is the important part; a president cannot legally impose a nationwide interest rate cap without Congress. Experts across the political spectrum have said the 10% directive has no binding authority, which is why lenders have ignored it.

Banks have also issued strong objections. Industry groups argue that a strict cap would:

• Reduce access to credit, especially for borrowers with lower scores.
• Force lenders to cut credit limits or close some accounts.
• Cause reductions in rewards, promotional offers, and underwriting flexibility.

An Important Distinction for Consumers

One of the biggest risks right now is consumer inaction. NFCC leadership flagged that borrowers may delay seeking help because they believe interest rate relief is coming when in reality, nothing has changed.

Even if a cap were passed, it would likely apply only to accounts in good standing, not accounts already carrying penalty APRs which are exactly the accounts many people are struggling with.

That’s why it is critical for people to avoid waiting if they need relief from high interest debt. Interest continues to accumulate month after month, and a Debt Management Plan (DMP) can often bring rates below what the proposed cap would achieve. People can see real, immediate relief.

Would a 10% Cap Help Consumers? Maybe — but Not Without Risks.

On its face, a 10% ceiling is appealing. Some estimates suggest Americans could save $100 billion per year in interest charges.

But experts also warn of unintended consequences:

1.      Reduced Access for Higher Risk Borrowers

Lenders may approve fewer people for loans or credit cards, or reduce limits to offset the reduced revenue.

2.      Expansion of Higher Cost Alternatives

Restrictions in the regulated credit card market may move borrowers toward less regulated, more expensive credit sources.

This combination could leave financially vulnerable consumers with even fewer safe options.

3.      Loss of Rewards and Subsidized Promotions

Zero percent introductory offers, cash back cards, and travel points could disappear if card companies lose pricing flexibility.

Bottom Line

The proposed 10% interest rate cap is generating headlines, but not actual changes. 
Right now:

• There is no legal cap in place.
• Card companies are not required to reduce rates.
• Legislation exists but hasn’t moved.
• Borrowers shouldn’t delay seeking help

What To Do Right Now

If you’re struggling with credit card debt, don’t wait to get help. It’s important to seek guidance early, because as the NFCC has emphasized, waiting for possible relief that may never come can make financial stress worse.

You also have real options right now. If you’re ready to take control of your finances, reach out to us today at www.myfinancialgoals.org or 888-818-5037 for support.

Published Jan 21, 2026.