Trump is claiming that he will support a rule change for credit cards that will cap interest rates at 10%. This is a horrendous idea that will cause real problems. The reason interest rates are where they are is a topic I have visited here before. People with bad credit are very likely to default.
With a ten percent interest rate, if more than 3% or 4% of people default, the bank will lose money covering the defaults.
Studies have shown that the lower your FICO score, the higher are your chances of default.
| Credit Score | % of the population | probability of default |
| 800 or more | 13% | 1% |
| 750-799 | 27% | 1% |
| 700-749 | 18% | 4.4% |
| 650-699 | 15% | 8.9% |
| 600-649 | 12% | 15.8% |
| 550-599 | 8% | 22.5% |
| 500-549 | 5% | 28.4% |
| less than 500 | 2% | 41% |
Credit Scores and Default Rates
With a ten percent default rate, anyone who has a credit score less than 700 is a money loser and won’t be able to get anything other than a secured credit card, and those with a credit score between 700-749 are right there on the border and will likely see cards with very low limits.
That isn’t to say credit scores are without fault. I detest how the FICO score works, but it is what the banks use, and for that reason, Trump’s actions will make sure Americans stop living beyond their means.
Maybe that’s his intent. If it isn’t, well, price controls never work as intended.
29 Comments
Grumpy51 · January 10, 2026 at 5:02 pm
I’ve mixed thoughts on this.
Certainly the infantilization of the public has been ongoing. Maybe our society is at a point where external controls have to kick in for the those without internal controls??
The biggest issue I see are our bankruptcy laws. Rack ’em up, walk away. Even Genghis Khan saw the theft from society with this. He set a law of 3rd bankruptcy resulted in execution (wrapped in a blanket and trampled by horses) as you had proven yourself a thief to society. If only…..
Anonymous · January 10, 2026 at 5:53 pm
More hyperbole from Trump.
Hightecrebel · January 11, 2026 at 8:39 am
Not a big fan of the government getting involved, but at the same time you have some of the predatory credit companies like Synchrony (CareCredit) that actively create reasons to jack up interest rates by slowing their own payment processing down to the point someone can pay on the website a week before the payment due date and still trigger the late payment penalty interest rate increase. If people aren’t paying close attention while dealing with whatever medical event caused the need, they’ll have to hunt for the interest rate in the tiny print on the bill after that first “late” payment, and go through a long process of challenging them to get it back to the original one.
Divemedic · January 11, 2026 at 9:50 am
Capital one is famous for that. Thats fraud and SHOULD be looked into. Not the same as someone screaming USURY and blaming jews because they can’t control their spending.
WDS · January 11, 2026 at 1:05 pm
I had to use Care Credit when I needed extensive dental work done and had no dental insurance. I paid my monthly bill (on time) and incurred no interest charges plus they reported my timely payments to the credit agencies and my scores increased dramatically. I also read and understood their terms BEFORE agreeing to use their service. If I had gone to my bank and taken out a loan, I still would’ve incurred interest charges despite paying on time and being a long-term customer.
Plague Monk · January 10, 2026 at 6:33 pm
Trump is like a monkey flinging poo; throwing out all kinds of ideas around in order to keep from getting impeached on the first day of the next Congress, after the Dems take over both the House and Senate. I predict it will go nowhere, like so many of his ideas.
Steady Steve · January 10, 2026 at 7:17 pm
I believe the goal here is to stop banks from giving credit cards to high risk borrowers. By capping rates the banks will be forced to lower credit limits drastically but give all borrowers the opportunity to pay down their debt. Since the banks own Congress this will probably not pass.
Dirty Dingus McGee · January 10, 2026 at 8:29 pm
Zero chance the bankers that run this country will allow this to happen.
Texas Dan · January 10, 2026 at 8:56 pm
Peak stupid for a numbers guy. I voted for the guy three times but he can be an idiot. Thankfully he’s our idiot.
Rick · January 10, 2026 at 9:55 pm
It is difficult to fathom that so many people do not see, if even to consider the possibility, that such a scheme as this is not as it appears, nor is it intended to be.
Laughably worse is to seemingly ignore that Trump has been a very successful in business because he has a high understanding of finances and the use of credit.
Then apparently ignoring that his style, his MO, has been to manipulate his opposition into doing that which they have stated they won’t do. Trump is famous for this, but lets all dismiss such results as nothing more than parlor tricks and antics under the big top.
It really is gobsmackingly ludicrous that so very many people lable Trump as a buffoon all the while dismissing all of the aforementioned. Indeed, such dismissive tones only reveal the ineptitude of them who speak it.
Birdog357 · January 10, 2026 at 10:22 pm
I have a 750 credit score and my rate is prime + 16%. That’s pure usury.
Divemedic · January 11, 2026 at 7:58 am
I disagree. No one is forcing you to run up a balance.
Look, its an unsecured loan. It’s risky money. If you dont like the terms, its easy- just dont borrow the money.
Birdog357 · January 11, 2026 at 1:06 pm
I didn’t say anything about a balance. I was refuting the claim that high rates means low score. I get offers in the mail all the time and I haven’t seen a rate that didn’t start with a 2 in years.
Divemedic · January 11, 2026 at 3:04 pm
If you don’t carry a balance, the rate doesn’t matter.
Michael · January 11, 2026 at 10:47 am
Or perhaps like my family does (even my granddaughter) whatever you charge you pay off in full before its due.
I’ve a 2% cash back card for years and I’ve never paid a dime of interest. Just spent almost 42 dollars credit at BJ’s Wholesale yesterday.
Divemedic · January 11, 2026 at 11:52 am
That’s what we do. We look for the best rewards and cashback deals. We charge everything to the cards that maximize benefits, then pay them off at the end of the month. My Amazon card is 5% cash back on all Amazon purchases. We have another store card that is 5% back on fuel and groceries, etc.
Steve · January 11, 2026 at 8:04 am
Not a great idea, but maybe the intent really is to strip the fiscally-clueless of the ability to get in over their heads in the first place. Now do the same with
stupidstudent loans.Tom235 · January 11, 2026 at 8:46 am
I’m old enough to remember when CC interest capped at 12% (as I recall) in the 70s. The CC companies used the inflation rates of the time to justify raising the rates to beyond what the Mafia supposedly charged (29.99% vs 25%: lawyers vs broken legs). I’ve not seen any of those CC companies lowering their rates because inflation rate dropped.
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I’m in favor of the lowered rates. People will borrow regardless of their ability to repay (student loans anyone?). I don’t favor banks but this is a 2-sided issue; why loan money to those that likely can’t repay?
Divemedic · January 11, 2026 at 9:52 am
But in the 70s, credit cards were difficult to get, limits were low, and most didnt let you carry a balance.
Mandated lower rates would push us back to those days, ones where only affluent would get credit cards. As I alluded to in the post, that may well be Trump’s actual goal here.
Dirty Dingus McGee · January 11, 2026 at 9:06 pm
“But in the 70s, credit cards were difficult to get”.
1978 or 79, can’t remember exactly, I was turned down for a Sears card. The reason given was, “people in your line of work (industrial maintenance) tend to default”. Thing is, I already had a Mastercard, albeit with a pretty low limit, $1000 IIRC. I quickly learned the trap of carrying a balance and over the last 45 years have probably only NOT paid what was due a dozen times. To learn restraint get an American Express card. Balance is due, period, no provision for paying part.
Tom235 · January 12, 2026 at 8:17 am
So maybe credit cards should be hard to get … As it appears now, CCs are essentially the digital currency everyone seems to speak of and “fear”. It’s very difficult to pay cash at many places. CCs didn’t really exist before the late 50s; maybe they shouldn’t exist now. I suspect we’ll disagree on this point.
Divemedic · January 12, 2026 at 8:54 am
No, we don’t disagree. Credit cards are too easy to get, but that isn’t for government to decide. If people want to pay those kinds of rates, so be it. They signed the contract to get the card, which plainly has the rates, fees, and charges, but they don’t care at that point. Then they borrow the money, but want to squawk when they don’t like what it costs.
I don’t understand why you think it’s difficult to pay cash. Everywhere takes credit cards for everything- even Girl Scouts selling cookies on the sidewalk. However, if there ARE businesses that don’t take cash, nothing is stopping someone from using a debit card.
Elrod · January 11, 2026 at 9:02 am
Trump is very good at “wheels within wheels” and I suspect that’s what’s happening here. Proposing a 10% interest cap will spark a lot of discussion, going both ways, a primary point being that in today’s current structure it’s untenable. So many people will get shut out from credit, credit that enables them to barely keep their heads above water, shutting them off from it will force dependence upon cash which will quickly lead to a lot of business bankruptcies (and, probably, crime, as “insufficient cash” will prevent those purchases now made on credit and some purchases – like food – cannot be time-shifted).
That’s, in reality, a malignant “credit dependency” that’s been allowed to fester; there are plenty of people who perpetually make only the minimum payment on nearly maxxed-out credit cards because that’s all they can do. And that’s an incredibly expensive way to try to live. That they’re doing it on 23% credit cards instead of 10% cards is, really, an insignificant difference; not being able to pay off the balance at a 10% rate is no different than not being able to pay it off at a 23% rate, it just means the hole you’re digging gets dug more slowly. It will wind up being just as deep.
If what Trump is doing leads to variable interest rates, higher credit rating brings lower interest rates, worse credit rating brings higher rates – it cannot work any other way, as you point out the prospective loss rate has to be covered or there will be no incentive at all to provide credit to anyone.
I’d guess that those in the top credit rating bracket care little about card rates because they don’t pay them – the balance gets paid off in full every month, they’re up to date (or ahead) on other monthly obligations like morrtgages and car payments (many of that top rating bracket, probably don’t have monthly payments because they’ve paid off car loans and mortgages well ahed of schedule, which is what out them in that top rating bracket in the first place.
I think, like what Trump did, and is doing, with tariffs, this is a “negotiating leverage” tactic to get attention devoted to the overall credit situation and its effect in general on the American economy.
Divemedic · January 11, 2026 at 9:56 am
Agreed. Credit cards aren’t a money printing machine, but too many people treat them as such.
Feral Underclass · January 11, 2026 at 1:18 pm
EDITED BY Divemedic: This post looked like spam, but it was from someone who has posted here in the past, so I decided to allow it after redacting the name and website of the company, because I don’t allow advertising. END EDIT
This is a bit off topic but since we’re talking interest rates I thought I’d toss it out. I asked GROK what one of the quickie loan companies, (redacted), charges for interest. Results below.
(Redacted name and website) does not charge a single, fixed interest rate. Instead, rates vary significantly by state, loan type (such as lines of credit, installment loans, or flex loans), and specific terms. They primarily offer short-term, high-cost borrowing products like lines of credit and installment loans, which often come with very high Annual Percentage Rates (APRs) — typically in the triple digits. Key Details on Rates For lines of credit (their most common product in many states), the APR commonly ranges from 229% to 299%, though it can reach up to 325% in states like Missouri or South Carolina.
Daily periodic rates (used to calculate interest on outstanding balances) are often between 0.6274% and 0.8904%, which annualizes to those high APR figures.
In some cases, like Wisconsin installment loans, APRs can range from 241% to 449%.
Other products (e.g., in Texas or Tennessee) may use a combination of fees plus interest (such as daily fees of $0.40–$0.80 per $100 borrowed plus 10% interest), resulting in effective APRs often in the 300–400%+ range or higher depending on the term.
These rates are state-specific due to varying regulations, and operates in only about 29 states with different offerings and limits in each. Important Notes, These are extremely high-cost loans, far above typical personal loans or credit cards (where affordable rates are often considered under 36% APR by consumer advocates).
User reports and reviews frequently mention effective rates around 299–325% or higher, with rapid accrual of interest/fees leading to much larger repayment amounts.
(Redacted) directs users to their Rates & Terms page (Redacted) and state-specific subpages for exact details, as terms depend on your location.
Feral Underclass · January 11, 2026 at 3:15 pm
Sorry about that. I should have known to police the post myself. Mea culpa.
Treefarmer · January 11, 2026 at 1:47 pm
FICO scores are the worst. We have paid our credit cards in full each month for more than 40 years. We haven’t had a car loan since 2004 and always paid them off early. We haven’t had a mortgage since 2011. When we had the car and mortgage debt, our FICO was 825-850. Once we paid off the car and mortgage debt, our FICO mgically droppd to 749. We still pay off the credit card in full every month. They lower our FICO score to around 725 whenever we run up a crdit card balance close to our limit, even though we are just two weeks or less from paying it off in full again on auto pay.
Divemedic · January 11, 2026 at 3:13 pm
That’s because FICO scores are a rating of how likely you are to be profitable. I have a problem with the scoring models, but I don’t have a problem with charging whatever interest, as long as a rate change isn’t applied after the money is borrowed. Money is like any other good or service- there is a price for getting it, and if you don’t like the price, don’t buy it.
Credit Card Followup – Area Ocho · January 13, 2026 at 4:12 am
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