The Truth Social post went out Friday night. Credit card interest rates would be capped at 10% starting January 20. No legislation. No congressional vote. Just a presidential announcement that Americans would “no longer be ‘ripped off’ by Credit Card Companies.”
By Saturday morning, constitutional scholars were asking the obvious question: Can a president unilaterally cap interest rates that Congress regulates through banking law?
The short answer is no. The longer answer reveals how presidential announcements can create policy expectations the Constitution doesn’t authorize—and what happens when campaign promises collide with separation of powers.
Discussion
How would bypassing Congress restore law and order, isn't that against the Constitution?
Here we go, more fake news trying to bash Trump for standing up for the American people! Trump actually wants to protect us from these greedy banks, but the Dems and their deep state pals are standing in his way as usual. MAGA forever!! 💪🇺🇸
Finally a President who stands for the people!
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What Trump Actually Announced
Trump’s Truth Social post was characteristically light on legal mechanism and heavy on political framing.
He declared credit card companies charge rates of “20 to 30%, and even more” that “festered unimpeded during the Sleepy Joe Biden Administration.”
The cap would take effect January 20, 2026—exactly one year into his second term. No details on implementation. No explanation of legal authority. No mention of congressional legislation required.
The announcement followed months of inaction on a campaign promise. During his 2024 campaign, Trump pledged to cap credit card rates as American credit card debt hit record levels—$1.17 trillion in the third quarter of 2024, up from $770 billion in early 2021.
Senator Bernie Sanders had criticized Trump just one day earlier for not fulfilling the promise and for deregulating banks instead. Hours later, Trump made the announcement.
The timing suggests political response rather than legal strategy. But political announcements don’t change banking law—only Congress can do that.
The Congressional Authority Problem
Banking regulation is a congressional power, exercised through legislation like the Truth in Lending Act, the Credit Card Accountability Responsibility and Disclosure Act, and the Dodd-Frank Wall Street Reform Act.
Interest rate caps are price controls—government restrictions on what private companies can charge. The Constitution doesn’t explicitly assign price control authority to any branch. But Congress exercises it through the Commerce Clause—regulating interstate commerce, which includes banking and credit.
Presidents can request legislation. They can propose caps. They can pressure companies. They cannot unilaterally impose interest rate caps without congressional authorization.
Trump’s announcement provides no legal mechanism because no legal mechanism exists for unilateral presidential action. He would need Congress to pass legislation capping rates, which he would then sign into law.
Without that legislation, the announcement is political theater—potentially effective at pressuring Congress or credit card companies, but legally unenforceable.
The Sanders-Hawley Bill That Went Nowhere
Senators Bernie Sanders and Josh Hawley introduced bipartisan legislation in February 2025 to cap credit card interest rates at 10% for five years. The bill explicitly recognized that congressional action was required.
“When large financial institutions charge over 25 percent interest on credit cards, they are not engaged in the business of making credit available. They are engaged in extortion and loan sharking,” the lawmakers wrote.
The bill faced massive opposition from banking industry groups and never advanced. The Bank Policy Institute, American Bankers Association, and multiple other financial industry organizations lobbied against it.
Banking groups argued a 10% cap would reduce credit availability, harm consumers with lower credit scores who rely on cards despite high rates, and drive borrowers toward less regulated alternatives like payday loans.
The Sanders-Hawley bill’s failure demonstrates the political obstacle Trump faces. Even bipartisan legislation couldn’t overcome banking industry opposition. A unilateral presidential decree faces that same opposition plus constitutional invalidity.
What Presidents Can Actually Do About Interest Rates
Presidents have limited tools for affecting credit card interest rates without congressional legislation:
Regulatory pressure through agencies: The Consumer Financial Protection Bureau regulates credit card practices. A president could direct CFPB to enforce existing rules more aggressively or issue new regulations within statutory authority. But CFPB cannot cap interest rates without congressional authorization.
Bully pulpit: Presidents can publicly shame companies charging high rates, call for voluntary reductions, and threaten regulatory action. This worked historically—Theodore Roosevelt’s trust-busting relied partly on public pressure.
Legislative proposals: Presidents can propose legislation and use political capital to pressure Congress. This is the constitutional path—but requires congressional cooperation.
Antitrust enforcement: If high rates result from anticompetitive behavior, the Justice Department could investigate. But this addresses market structure, not rate levels directly.
None of these tools allow unilateral interest rate caps. Trump’s announcement implies power he doesn’t have—unless Congress grants it through legislation.
The Industry Response Reveals the Stakes
Banking industry groups issued a joint statement within hours: “Evidence shows that a 10% interest rate cap would reduce credit availability and be devastating for millions of American families and small business owners who rely on and value their credit cards.”
The economic argument has merit regardless of constitutional questions. Credit card lending involves risk. High interest rates partly reflect default risk – people with poor credit histories pay higher rates because they’re more likely to default.
Cap rates at 10%, and lenders may simply deny credit to higher-risk borrowers. Those borrowers then turn to payday loans, pawn shops, or other alternatives with even worse terms and less regulation.
The industry response also reveals lobbying power. Banks successfully blocked Sanders-Hawley legislation. They’ll deploy the same opposition to any congressional attempt to implement Trump’s announced cap.
Trump can announce the cap. Banking industry can make it politically impossible to implement.
The Consumer Financial Protection Bureau Irony
Senator Elizabeth Warren noted the bitter irony: Trump claims to help consumers while simultaneously trying to gut the Consumer Financial Protection Bureau—the agency designed to protect consumers from predatory financial practices.
“Since then, he’s done nothing but try to shut down the [Consumer Financial Protection Bureau]. Trump doesn’t care about affordability. Americans know a fraud when they see one,” Warren said.
The CFPB was created after the 2008 financial crisis specifically to regulate consumer financial products including credit cards. It enforces rules on billing practices, disclosure requirements, and unfair practices.
But it cannot cap interest rates without congressional authorization. And Trump’s administration has sought to weaken the bureau through budget cuts and leadership changes.
Announcing an interest rate cap while undermining the agency that would enforce consumer protection creates policy incoherence—unless the announcement is purely political rather than serious policy.
Bill Ackman’s Deleted Tweet
Billionaire hedge fund manager Bill Ackman – a Trump supporter – initially posted, then deleted, a tweet calling the announcement “a mistake” that would cause credit card cancellations for consumers.
His later clarification tried to soften the criticism:
“I think President @realDonaldTrump’s goal of reducing credit card interest rates is a worthy and important one. My concern about capping rates at 10% is that doing so will inevitably cause millions of Americans to have their cards cancelled.”
The deletion and revision reveal the political awkwardness. Trump supporters want to support his announcements. But the economic reality of interest rate caps creates genuine policy concerns even for allies.
Ackman’s concern is economically sound: if lenders can’t charge rates reflecting risk, they’ll stop lending to risky borrowers. The policy helps people who keep their cards. It hurts people who lose access to credit entirely.
The Bipartisan Political Appeal
Josh Hawley, the Republican senator who co-sponsored legislation with Sanders, immediately praised Trump’s announcement: “Fantastic idea. Can’t wait to vote for this.”
The political appeal is obvious and bipartisan. Credit card debt is massive—$1.17 trillion. Interest rates of 25-30% feel predatory. Voters across the political spectrum support caps.
Sanders and Hawley don’t agree on much. But they both sponsored interest rate cap legislation. Trump’s announcement taps into genuine populist sentiment that crosses party lines.
The political appeal makes Trump’s announcement smart politics even if it’s legally dubious. Voters hear “Trump capped credit card rates” and respond positively. The constitutional impossibility of unilateral action gets lost in political messaging.
What Happens on January 20?
Trump announced the cap takes effect January 20. That date arrives. Then what?
Without congressional legislation, nothing legally changes. Credit card companies continue charging existing rates. No enforcement mechanism exists. No agency has authority to impose caps Trump announced.
Trump could theoretically claim credit card companies are defying presidential orders. He could pressure them publicly. He could threaten regulatory action. But none of that creates legal obligation to comply.
The most likely outcome: January 20 passes, rates don’t change, and the announcement fades as political rhetoric rather than actual policy.
Alternatively, the announcement could pressure Congress to act. Banking committees could hold hearings. Legislation could advance. Trump could claim credit for forcing action.
But congressional action requires overcoming the same banking industry opposition that killed Sanders-Hawley. That’s unlikely in Republican-controlled Congress where financial deregulation is typically preferred policy.
Let's bring back law and order; presidents can't just bypass Congress like this!