Trump plans drastic cap on credit card interest rates – critics warn of 'price regulation'

During a campaign appearance on Long Island, Donald Trump drew attention with a proposal to cap credit card interest rates at 10%—a plan that quickly faced sharp criticism. Before a lively crowd of approximately 16,000 supporters at Nassau Coliseum, the former President announced his plans to significantly reduce interest rates, a drastic move compared to the current average of 21.5% according to Federal Reserve data. "We will cap them at around 10%. We cannot let them be 25 or 30%," Trump declared to roaring applause. "While working Americans catch up, we will temporarily cap credit card interest rates." This step is part of Trump's comprehensive economic strategy, yet critics warn of potential negative consequences. Industry insiders compare Trump's proposal to so-called "price controls," which have also been proposed by Democrats. "Trump just proposed his version of price controls," commented Peter Schiff, Chief Economist at Euro Pacific Asset Management. Schiff warned that such a cap could ruin the credit card industry. "This would destroy the industry and millions of Americans would lose their credit cards," he added. "There are high losses on credit cards from people who don't pay, so they need the high rates to compensate. There's also a lot of fraud." Credit card interest rates have never dropped to 10% in recorded data dating back to 1994. Rates have surged since early 2022, mainly due to inflation during the COVID-19 pandemic. Critics fear that capping rates could backfire, harming the very people Trump aims to help. An insider from the Consumer Bankers Association bluntly stated, "Government-imposed price controls on credit card interest rates would hurt all cardholders, especially the lowest-income Americans." Low-income individuals or those with poor credit could lose access to credit entirely. The American Bankers Association echoed this sentiment. "We have opposed similar rate-cap proposals in the past," said a spokesperson, pointing to efforts by figures like Bernie Sanders and Alexandria Ocasio-Cortez to cap rates at 15%. "This would deny access to credit for consumers who need it most. Instead, they would turn to less regulated, riskier alternatives like payday lenders and loan sharks." Trump's proposal also reflects recent political debates over price controls. Last month, Trump vigorously criticized Vice President Kamala Harris for her proposal to combat price gouging in the food industry, calling her plan "communist" and accusing her of being "Marxist". Despite inquiries from The Post, Trump's team did not comment on how the cap on credit card interest rates would be implemented. However, the 45th President is sticking to his bold promises. Ahead of the rally on Long Island, Trump also vowed to lower auto insurance rates, stating on social media: "Your auto insurance has gone up 73%—VOTE TRUMP, I WILL HALVE THAT NUMBER!