Sen. Bernie Sanders (I-VT) is preparing to introduce legislation to limit credit card interest rates to 10%, a move that aligns with a proposal made by President-elect Donald Trump during his campaign.

The proposed legislation aims to address the escalating financial pressures on American consumers burdened by high credit card interest rates, and it echoes similar sentiments expressed by Trump, as Fox News reports.

Amid Trump's fall campaign efforts in New York, he pledged to implement a temporary cap on credit card interest rates at 10%.

This promise is part of his broader agenda that led to his electoral victory against Vice President Kamala Harris. Trump has indicated that this policy would offer a reprieve, allowing Americans to regain their financial footing.

Rising Credit Card Debt in U.S.

The urgency for such legislative measures is underscored by the nation's escalating credit card debt.

According to MarketWatch, American households saw their credit card debt swell to $1.17 trillion during the third quarter of 2024. Lending Tree further reported the average credit card interest rate was an overwhelming 24.43% in December 2024.

Given the financial pressures on consumers, Trump’s transition spokesperson, Karoline Leavitt, verified the President-elect's intent to fulfill his campaign commitments, including the suggested interest rate cap.

Leavitt highlighted the mandated nature of his electoral win, emphasizing the public's expectation for Trump to deliver on his promises.

GOP Resistance and Existing Criticism

Despite its potential benefits for consumers, the proposed interest rate cap has met with opposition, particularly among Republican leaders. The GOP has historically resisted regulations perceived as hindrances to businesses and credit service providers.

Incoming Senate Banking Committee Chairman Tim Scott, a vocal opponent of regulatory actions in the credit card sector during the Biden administration, has expressed concerns.

Earlier this year, Scott criticized attempts to cap credit card late fees, asserting such measures could curtail access to credit products. He argued that reduced credit card availability could lead to increased interest rates for timely paying borrowers and enhance the risk of late payments.

Sanders' Challenge to New Administration

As Sanders prepares to launch his proposed legislation, the stance of the incoming administration becomes crucial. Sanders publicly challenged President-elect Trump via X, urging him to support the legislative effort. Sanders underscored the alignment of Trump’s campaign proposal with the legislative cap he intends to introduce, inviting Trump to back this initiative.

While Trump's initial proposal was framed as a temporary measure, it remains uncertain whether Sanders' legislation will also be limited in duration. The senator's office has not provided clarification on this aspect, leaving open questions regarding the permanency of the cap.

Potential Impact on Consumers

The proposed 10% cap on credit card interest rates could substantially reshape the credit card industry landscape. Proponents believe it would offer a much-needed respite for American households struggling with financial liabilities. However, opponents point to potential drawbacks, such as constrained access to credit and elevated costs distributed among various borrower segments.

Following President-elect Trump’s indicative remarks on the excessive nature of current interest rates, Tim Scott's office has remained silent regarding the proposed cap. Scott's previous comments on related regulatory attempts hint at likely resistance from his faction.

Waiting for Legislative Action

As the new year unfolds, the introduction and potential passage of the interest rate cap legislation will be closely watched. Its progress will reflect not only political dynamics but also the administration's response to economic challenges impacting everyday Americans.

While Sanders' legislation seeks to mitigate the mounting financial burdens of consumers, the response from both policymakers and industry stakeholders will ultimately shape its realization and effectiveness.

In the interim, the public and financial sectors alike anticipate further developments on this contentious yet crucial policy.