United States President Donald Trump intends to cap credit card interest rates at 10 percent for one year, beginning January 20, the date of his inauguration. Trump initially proposed the cap during his campaign and reiterated the plan in a Truth Social post last week, claiming Americans were being exploited by interest rates as high as 30 percent.

Trump addressed reporters on Air Force One on Sunday, stating, "We're putting a one-year cap at 10 percent. And that's it. They know it," accusing credit card companies of abusing the public.

The proposal raises questions about its feasibility and potential impact on the credit card industry and consumers. While there is bipartisan support for lowering the cost of credit, implementing a hard cap presents significant challenges.

A 10 percent interest rate cap could drastically alter the credit card landscape. Currently, interest rates on credit cards often exceed 20 percent, particularly for individuals with lower credit scores. The high rates are justified by lenders as a way to offset the risk of default.

The potential consequences of such a cap include reduced credit availability, especially for those considered higher-risk borrowers. Credit card companies might tighten lending standards, making it more difficult for individuals with limited credit history or lower credit scores to obtain credit cards. This could disproportionately affect lower-income individuals who rely on credit cards for essential purchases.

Furthermore, the cap could lead to reduced rewards programs and other benefits currently offered by credit card companies. To compensate for lower interest revenue, issuers might cut back on perks like cash back, travel miles, and purchase protection. Some companies might exit the credit card market altogether, reducing competition and consumer choice.

The legal basis for a federal interest rate cap is complex. While the federal government has the power to regulate interstate commerce, states also have laws governing interest rates. Any attempt to impose a national cap could face legal challenges, particularly if it conflicts with existing state laws.

The potential impact on the broader economy is another consideration. Credit card spending is a significant driver of consumer spending, which accounts for a substantial portion of the U.S. gross domestic product (GDP). A disruption in the credit card market could have ripple effects throughout the economy.

It remains to be seen how Trump intends to implement the cap and whether it will gain sufficient support in Congress to become law. The credit card industry is likely to lobby heavily against the proposal, arguing that it would harm consumers and stifle economic growth.