President Trump proposes a temporary 10% cap on credit card interest rates, set to begin on Jan. 20. Average rates are around 23%, and can be as high as 36% for those with lower credit scores. Credit card issuers push back, arguing the cap will harm those it aims to help. – Nam Y. Huh/AP

Trump wants to prevent Americans from being “ripped off” by credit card companies charging high rates. The proposed cap could save households $100 billion annually. Interest rates at federal credit unions are already capped at 18%. The move is part of a longshot proposal Trump first mentioned during the 2024 presidential campaign.

Delinquencies and charge-offs contribute to high credit card rates. About 2.98% of credit card balances are currently delinquent, up from under 2% in 2021. Elevated rates are due to unsecured nature of credit card debt. A 10% cap could lead to $700 savings annually for those with high interest rates.

Trump’s cap could impact access to credit cards for those with lower incomes and credit scores. Industry estimates suggest close to 90% of cardholders could lose access to credit. The American Bankers Association warns the cap could drive consumers to more costly alternatives with high interest rates.

Credit card lending could become less profitable, impacting rewards programs and potentially leading to new fees. Credit card issuers like Capital One Financial and Synchrony Financial could be at risk. Trump’s enforcement of the cap remains unclear, with legal experts pointing out the need for congressional action.

Bipartisan legislation for a temporary cap on credit card interest rates has been introduced, supported by Senators like Bernie Sanders and Elizabeth Warren. Warren criticizes Trump for only trying to shut down the Consumer Financial Protection Bureau. The CFPB attempted to cap credit card late fees, but a federal judge halted it.

Read more at Yahoo Finance: What 10% Credit-Card Rate Cap Would Mean for Your Wallet