On Point with Meghna Chakrabarti Trump wants to cap credit card interest. Can he?
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Jan 21, 2026 Christopher Palmer, an Associate Professor of Finance at MIT Sloan, lends his expertise on credit markets as they discuss Trump's proposal to cap credit card interest rates at 10%. Palmer outlines potential economic drawbacks, emphasizing how such caps could reduce credit access, particularly for risky borrowers. They explore the staggering $1.24 trillion in credit card debt and the mechanics behind interest rate determination. The conversation highlights the need for safer lending products and stronger social safety nets to address the underlying financial instability many Americans face.
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No Federal Cap And High APRs
- There is no federal cap on credit card interest, and state usury laws are largely ineffective due to loopholes.
- Average U.S. credit card APRs now sit around 20–22%, nearly double from a decade ago.
State Charters Shape Card Rates
- Banks often issue credit cards under lenient-state charters like South Dakota to avoid strict state usury limits.
- National banks use their home-state rules to preempt borrowers' state caps and offer cards nationwide.
Shop Rates Before You Apply
- Check posted rates on comparison sites like Bankrate or NerdWallet before applying for a card.
- Use your credit score to shop for lower spreads over prime and reduce your APR.