The TRUTH on Trump CUTTING Credit Card Interest to 10%

So, on Friday, President Trump posted this on Truth Social. Please be informed that we will no longer let the American public be ripped off by credit card companies that are charging interest rates of 20 to 30 percent. Blah, blah, blah, blah, blah. Effective January 20th, 2026, I, as President of the United States, I'm calling for a one-year cap on credit card interest rates of 10 percent. Coincidentally, the January 20th date will coincide with the one-year anniversary of the historic and very successful Trump administration. As if that's a coincidence. Now, this obviously would be very good news for people who owe large amounts of credit card debt, but possibly bad news for some other types of credit card users. But most importantly, can he actually do it? Well, in this video, we are going to go through it all. Hey, credit warriors, welcome to the show. My name is Ben Hedges, aka The Credit Shifu, and on this channel, I cover U.S. credit cards, personal finance and luxury travel. If you like the sound of that, please subscribe. But let's get into it. So U.S. credit card debt as of quarter three, 2025, which is the most recent quarter that we have data for, stands at one point two three trillion dollars. It will probably go even higher in quarter four as it normally does. If you look back at historical trends with holiday spending. Now, this is a problem. It is costing Americans a lot of money. The average interest rate for new credit card accounts right now is twenty three point seven nine percent, meaning that if you had, say, a ten thousand dollar balance that you're paying interest on, you would pay two thousand three hundred and seventy nine dollars per year. And there are many people and families that have balances of twenty thousand dollars, thirty thousand dollars or more. Now, these balances have built up due to the period of serious inflation that we've been through over the past few years, with inflation hitting nine percent at its peak in June twenty twenty two. People have spent down the savings they accumulated during covid and have started spending more than they earn, putting that debt onto credit cards. So that is the problem. And this is Trump's proposal to fix it. Cap rates at 10 percent for a year and let families use the money they save on interest to get their balances paid down. Now, this isn't anything new. There has actually been a bill sitting in the Senate since February last year introduced by Bernie Sanders that would cap credit card interest rates at 10 percent, but for five years. But it hasn't gone anywhere. So could Trump actually succeed and do this where the Senate has failed? Well, first of all, there will be stiff opposition from banks who say that this would be devastating for their business model. U.S. bank stocks are all down with Capital One who rely heavily on their credit card business and especially lending to subprime borrowers who they can charge the highest interest rates to hit the hardest down seven percent this morning. CNBC interviewed some insiders who said that big banks would not be able to afford taking their entire portfolios to 10 percent. Banks would thus have to cut costs by raising other fees or cutting rewards like points and cashback. The Electronic Payments Coalition released a study today claiming that anyone with credit score under 740, which is most people, would see their accounts closed or credit limits massively reduced as banks cut risk. Up to 190 million people would be affected. That's like most of U.S. adults, actually. But Trump is great at opening negotiations with a very scary sounding opening bid like we're going to invade Greenland. Yeah, seriously, I doubt that's going to happen. I think it's more likely he just wants to bring Denmark to the table. Maybe it goes independent and grants access for U.S. mining and more military bases. And I think this could be very similar. He wants big bank CEOs like Jamie Dimon of Chase and Steve Square of American Express to come to the table and work something out. Maybe they reach an agreement to cap it between 15 to 20 percent depending on credit score. That would still save people a lot of money and interest. The average person might save like five, six, seven, eight percent, which could amount to a few thousand dollars a year. There also doesn't seem to be any way that he can do this before January 20th. If he wants a bill to go through Congress, which is the most obvious way of doing it, it would take longer. He could do something through the CFPB, the Consumer Finance Protection Bureau. But that bureau is kind of on life support anyway. The Trump administration wanted to shut it down early on in their second term. But they could always use some kind of emergency declaration like they have done with the tariffs using the International Emergency Economic Powers Act, or IEPA, to impose tariffs. You know, maybe they could say that there's an affordability crisis and have some emergency declaration which allows them to have additional powers or something. But whatever it is, it has to be done before January 20th to live up to what Trump set out to do in his truth social post. Now, lastly, is this good for us? Well, all types of people watch this show. OK, so if you in the audience owe credit card debt and you're paying interest on that, then some kind of reduction in your interest rate, as long as it doesn't lead to your accounts being closed because you're a higher risk and then you have to end up paying it all at once and you don't have the money, so you go bankrupt. As long as it doesn't lead to that, it is a good thing. But for people who just collect the points and cash back and they're super diligent, they haven't paid a cent of interest in their life, then no, this is not a good thing because probably your rewards are going to get reduced or your annual fees are going to go up or whatever. But what do you think about this, guys? Please leave your comments down below and subscribe to this channel so you never miss a video. And we'll give you an update on this as soon as we know, probably before January 20th. All right. We'll see you in the next one.