Trump’s 10% Credit Card Cap And America’s Debt Dependence Explained

U.S. President Donald Trump has renewed a proposal for a 10% cap on credit card interest rates, arguing that issuers are “ripping off” American consumers with high borrowing costs. While the proposal has political roots, it also speaks to a deeper economic reality: American households are highly dependent on credit — especially credit cards — and are carrying record levels of debt.

According to Federal Reserve data, over 80% of U.S. adults hold at least one credit card — more than 216 million consumers.

Credit card balances reached roughly $1.23 trillion in the third quarter of 2025, a record high, and have climbed steadily year-over-year. Revolving credit — which includes credit cards — is a major component of consumer debt and has been rising alongside broader household borrowing.

That credit burden isn’t evenly spread: surveys show that about 53% of Americans have credit card debt, carrying an average balance of roughly $7,700, and a significant share say they wouldn’t be able to afford essential expenses without using credit cards.

Credit cards in the U.S. are not just payment tools — they’re a financial lifeline. Many Americans use credit cards routinely for everyday spending, emergency costs and bill payment. Data from Bankrate indicates that roughly 46% of cardholders carried balances in 2025, meaning interest accrues month after month, making debt more costly over time.

Federal Reserve reporting underscores that credit card debt has climbed faster than many other debt types outside of mortgages, part of a broader rise in total household debt — which reached over $18.5 trillion in U.S. households in 2025.

Trump’s call for a 10% interest cap comes as many Americans grapple with high costs across the board, from housing to healthcare to credit costs. Average credit card APRs in the U.S. are more than twice the proposed cap, routinely hovering above 20%.

The president and some lawmakers argue that dramatically lowering those rates could ease household financial pain. Opponents caution that such a cap would require Congressional approval, as the executive branch lacks authority to unilaterally set nationwide interest limits.

In India, credit cards also carry high interest rates — often 24–35% per annum — but the dependence on revolving credit is lower compared to the U.S., where credit cards account for a significant share of consumer borrowing.

Indian households tend to rely more on EMIs and secured lending than on credit card balances, and regulatory oversight by the Reserve Bank of India focuses largely on transparency rather than rate caps.

Trump’s proposal highlights concerns about how deeply embedded credit is in the American economy and how expensive it has become for many families to borrow. Whether or not a 10% cap becomes law, the conversation reflects broader anxiety about household debt burdens and the cost of consumer credit in a landscape where borrowing is both common and costly.