Credit Card Rates Hit 20%+ as Trump Proposes 10% Cap

No, you're not imagining it. Americans are paying more for credit card debt than ever before—and it's not even close.

Credit card interest rates hit a staggering 20.97% in November 2025, with accounts carrying balances facing even steeper 22.30% rates, according to Federal Reserve data. Americans collectively owe $1.23 trillion in credit card debt, the highest level on record.

Enter Donald Trump with a bold proposal: cap credit card interest rates at 10% for one year. The plan has sparked fierce debate between consumer advocates cheering relief and bankers warning of financial catastrophe.

The $100 Billion Question

Vanderbilt University researchers found Trump's rate cap would save Americans roughly $100 billion annually in credit card interest. But there's a catch—card issuers would likely slash rewards programs by up to $27 billion to maintain profitability.

The banking industry fired back with dire predictions. The American Bankers Association warned the cap would force closure or dramatic reduction of 74% to 85% of existing credit card accounts, potentially affecting 159 million cardholders.

JPMorgan Chase CFO Jeremy Barnum didn't mince words during the bank's earnings call: "Consumers would lose access to credit on a very, very extensive and broad basis, especially the people who need it the most."

But is this corporate fear-mongering or legitimate concern? The answer lies somewhere in the middle.

How We Got to 20%+

Credit card rates didn't climb overnight. They follow a simple formula: the Federal Reserve's prime rate plus a margin set by card issuers based on your creditworthiness.

Jason Steele, founder of CardCon and veteran credit card expert, remembers when things were different. "When I started writing about credit cards in 2008, the prime rate plummeted to 3.25% during the financial crisis and stayed there for seven years," he recalls.

The pandemic pushed rates near zero, but inflation changed everything. The Fed aggressively hiked rates to combat rising prices, pushing the prime rate to 8.5% by July 2023. It currently sits at 6.75%.

Unlike mortgages or auto loans secured by assets, credit cards are unsecured debt. No collateral means higher risk for lenders—and higher rates for borrowers.

The Rewards Trap

Here's an uncomfortable truth: your cashback and travel points are partly funded by higher interest rates for everyone.

Americans earned $41.1 billion in credit card rewards in 2022, up 58% from $26.1 billion in 2019, according to the Consumer Financial Protection Bureau. With 80% of Americans carrying at least one rewards card, the demand for "plastic with perks" isn't disappearing.

"Credit cards that don't offer rewards will always have a lower interest rate than a similar card that does," Steele explains. Non-rewards cards typically offer rates two to three percentage points lower.

A 10% rate cap could force issuers to scale back rewards significantly. LendingTree'sMatt Schulz calls it "a seismic change" that might also trigger higher annual fees or fewer 0% balance transfer offers.

Your Defense Strategy

Whether Trump's rate cap materializes or not, you don't have to wait for Washington to act. Here's how to fight back against high rates:

Pay balances in full. It's the nuclear option against interest charges. "It's always, always, always better to avoid interest by paying your credit card balance in full and on time," Steele emphasizes.

Make multiple payments monthly. Since interest is calculated on your average daily balance, paying early and often reduces what you owe. "If I get my paycheck today but my due date is the 30th, paying now saves me seven days of interest," Steele notes.

Ask for a lower rate. This simple phone call works more often than you'd think. A 2024 LendingTree survey found 83% of people who requested lower rates got them, with average reductions of 6.7 percentage points—saving over $1,600 annually.

Consider balance transfers. For good credit borrowers, 0% balance transfer cards remain "about as good a weapon as you can have against credit card debt," according to Schulz. Personal loans average 14.48% for good credit—still high, but better than credit cards.

Choose boring over flashy. Skip rewards cards if you carry balances. Credit unions cap rates at 18% by law and exist to benefit members, not shareholders.

Avoid retail cards. Store cards often charge 30%+ interest rates that "used to be penalty rates for late payments," Schulz warns.

The Global Context

America's credit card rate crisis isn't happening in isolation. European countries typically maintain lower rates through stricter regulations, while developing economies often see even higher rates due to currency and credit risks.

The UK's average credit card rate hovers around 18-25%, while Australia maintains rates between 12-22%. Canada sees similar patterns to the US, with rates climbing alongside central bank policies.