Can Trump Cap Credit Card Rates?

Summary

Podcast Summary: Jill on Money with Jill Schlesinger

Episode: Can Trump Cap Credit Card Rates?
Date: January 14, 2026
Host: Jill Schlesinger, CFP®
Guests/Contributors: Mark (Producer/Co-host), CBS Mornings anchors (Nate Burleson, Gayle King, Vladimir Duthiers)

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Overview

In this episode, Jill Schlesinger dives into the headline-making proposal from former President Trump to cap credit card interest rates at 10%. The show unpacks whether he has the legal authority to do so, explores the potential impact on everyday Americans, and examines the wider ramifications for credit markets and the economy. The discussion also touches on recent developments at the Federal Reserve, including a Department of Justice investigation into Chairman Powell, highlighting the critical importance of Fed independence.

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Key Discussion Points and Insights

1. Can the President Legally Cap Credit Card Rates?

Timestamp: 04:52–05:19

• Legal Authority:

  • Gayle King clarifies, "We're not sure he actually can do this by fiat. It looks like it has to be Congressional action. There have been some bipartisan efforts ... to try to make this happen. They've stalled out. Maybe with the President's push they can get them revived again."
  • Takeaway: The President cannot unilaterally cap credit card rates; it likely requires legislation.

• Current Credit Card Rates:

  • Average credit card interest rate for balances is currently 20%.

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2. The Impact of a 10% Cap on Credit Card Interest

Timestamp: 05:20–06:26

• Example Calculation:
  • On a $5,000 credit card balance at 24% interest, a consumer might pay around $100/month in interest.
  • With a 10% cap, interest drops to $41/month, saving about $700/year.
  • Gayle King underscores, "It is unambiguously a great thing for consumers. The question is how long would it last?"
• Policy Duration:
  • Concern raised regarding the effect if the cap only lasts a year—would consumers get out of debt fast enough?

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3. Link Between Fed Rates and Credit Card Rates

Timestamp: 06:26–07:03

• Mechanics:
  • Vladimir Duthiers asks if Federal Reserve action will lower card rates.
  • Gayle King replies, "The Federal Reserve controls short-term interest rates and those do translate to credit card interest rates... But when the Fed goes down, say by a quarter of a percentage point, the credit card companies, they don't go down by a quarter of a percentage point exactly, some fraction of that."
  • Lower rates can stimulate growth, but risk boosting inflation.

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4. Political and Industry Pushback

Timestamp: 07:03–08:50

• Realistic Prospects of a Cap:
  • Mark: "It's only for a year. So I'm not sure how much ... that's going to move the needle in the long run."
• Industry Concerns:
  • Jill shares statement from Dennis Dollar (National Credit Union Association):
    • "The president cannot set interest rates on a credit card any more than he can set the Fed funds rate."
    • If caps are enforced, "companies will not be able to offer [credit cards] to riskier borrowers and those with lower incomes and lower credit scores. ... You want to drop the rate from 20 to 10, fine, we're not going to be able to offer your ... voters as much credit."
  • Potential for rise in less regulated lending alternatives like ‘buy now, pay later.’

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5. Best Practices for Consumers

Timestamp: 08:50–09:13

• Jill: "If you're carrying credit card balances, you know what you have to do. You got to go highest interest to lowest interest."
  • Urges listeners to pay off the highest-rate cards first, regardless of political promises.

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6. DOJ Investigation & Federal Reserve Independence

Timestamp: 09:13–13:26

• DOJ Investigation:

  • Powell under investigation for cost overruns on the Fed's building renovation project.
  • Accusation: Lying to Congress about project expenses.

• Powell’s Response:

  • (Mark quoting Powell from a video) “The new threat is not about my testimony ... the threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President. ... This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or whether instead, monetary policy will be directed by political pressure or intimidation.” [11:12]

• Federal Reserve Chair Terms:

  • Powell’s 4-year chair term ends in May, but he remains a Fed governor until January 2028.
  • Jill: "Just because you have a new chairman doesn’t mean that chairman can actually dictate policy. It’s still a vote." [13:22]

• Importance of Fed Independence:

  • If politicians control rates, they tend to push them down for short-term gain, risking long-term inflation.
  • Jill references Paul Krugman’s analysis of Turkey as a cautionary tale.

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Notable Quotes & Memorable Moments

• Gayle King (on impact of a 10% cap):
  "It is unambiguously a great thing for consumers. The question is how long would it last?" [06:05]

• Jill (on industry pushback):
  "The financial services industry does a ton of lobbying with the lawmakers in D.C. ... they’re coming out hard on this. There is no doubt." [08:38]

• Dennis Dollar (quoted by Jill/Mark):
  "The president cannot set interest rates on a credit card any more than he can set the Fed funds rate." [08:21]

• Powell (video message as paraphrased by Mark):
  "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President." [11:12]

• Jill (advice to listeners):
  "If you're carrying credit card balances, you know what you have to do. You got to go highest interest to lowest interest." [08:50]

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Timestamps for Important Segments

• 04:52 – Can the president cap credit card rates?
• 05:20 – Example of savings from a 10% cap
• 06:33 – How Fed decision impacts credit card rates
• 07:25 – Likelihood and effectiveness of a one-year cap
• 08:16 – Industry lobbying and concerns over riskier borrowers
• 09:13 – DOJ investigation into Federal Reserve Chair Powell
• 11:12 – Powell’s video response on Fed independence
• 13:04 – Discussion on Powell’s future
• 13:44 – Importance of central bank independence

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Final Thoughts

Jill and her team provide a clear-eyed examination of a hot-button issue impacting millions of Americans. While a presidential proposal to cap credit card rates makes headlines and could offer significant short-term relief for consumers, the legal, political, and economic barriers remain steep. At the same time, ongoing tensions between the White House and the Federal Reserve reinforce the importance of independent monetary policy. Listeners are reminded to focus on what they can control: prioritize paying down high-interest debt and stay alert to political developments that could affect personal finance.

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For more financial advice and to submit your questions, visit jillonmoney.com.

Transcript

[Jill Schlesinger]

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[Mark]

Right?

[Jill Schlesinger]

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[Mark]

Welcome to the Jill on Money show. It's Wednesday, January 14th. You better eat your Wheaties. It's like the news cycle is crazy. This is the program that takes the mystery out of your financial life.

[Jill Schlesinger]

But even for us, this is a lot.

[Mark]

If you've got a financial question, if something's going on in your life, we would love to hear from you. Go to our website, jillonmoney.com, click the contact Us button. Write us a note, let us know.

[Jill Schlesinger]

If you would like to come on.

[Mark]

The air by checking the box. Mark will do everything else. Now. Importantly, over the weekend there was a lot of chatter. Okay, okay. So There are two big things that happened over the weekend that you may have heard about and now we're gonna talk about it a little bit more in depth. One has to do with the Federal Reserve and the other has to do with the President who basically said he wants to put a cap on interest rates on credit card balances and credit cards. Actually he said I wanna put a cap, a 10% cap on credit card interest rates. That was on a social media posts that he put on there. Okay, so I thought this was an interesting moment to actually talk a little bit about credit card interest rates. And so what happened was I put together this segment with my fantastic. My other producer. I have the best producers, but Samantha, my wonderful producer and I thought we were going to do this whole thing about the Fed and then we'll do interest rates on the other side of it. But what we actually ended up doing was do a full blown segment about credit card interest rates and we kind of have a little Fed thing at the end. So here's what I think makes sense for today because this is fast moving and because there is a deadline. I just want to put this out into your universe because I know a lot of Jill on Money listeners don't carry credit card balances. But maybe you have kids who do. Maybe there are people in your life who do. Maybe. But I think it's a good moment to just take a breath about credit cards and interest rates. And you know, I think that what would be helpful is if we come back after this segment that we're going to re air and then Mark and I are going to talk a little bit more about interest rates. And then we're also going to talk about the Federal Reserve and essentially what has happened with this Department of Justice investigation. So first up, we are going to talk about credit card interest rates. And the anchors on CBS Mornings who helped me walk through this segment are Nate Burleson, Gayle King and Vladimir Dutier. So this aired yesterday morning and then Mark and I are going to come back after and talk about it.

[Nate Burleson]

So does the President have the legal power to do this? And what are the average credit card interest rates for consumers at the moment?

[Gayle King]

Okay, so we're not sure he actually can do this by fiat. It looks like it has to be be congressional action. There have been some bipartisan efforts actually that have been brewing over the last year or so to try to make this happen. They've stalled out. Maybe with the President's push they can get them revived again. So we'll have to see Right now, the average credit card interest rate that you pay if you're carrying a balance is 20%.

[Mark]

Wow.

[Gayle King]

So that is a massive amount. And people have been struggling with those high interest rates for some time.

[Mark]

I remember when it was 17% and I thought, thought that was, that was high. So what would it mean if it was capped at 10%?

[Gayle King]

Well, first of all, what we don't know is whether the president is saying 10% on anything new you charge or 10% on the whole balance you're carrying. But let's presume it's the whole balance. Just think about this. You know, most people, they carry about 60 $500 is the average balance. I'm going to try to make the math a little bit easier for you this morning. If you had a $5,000 balance and you were, say, had 24% percent interest, because 20 is the average. So we're used 24. You're paying a lot of your payment towards interest itself. 100 bucks a month. If we slapped a 10% cap on that, it would reduce the amount of interest to $41 a month. And guess what? That saves you about $700 a year in interest. So it is unambiguously a great thing for consumers. The question is how long would it last? And if it's only one year, would you really get out of the hole after that? One year Reprieve is up.

[Nate Burleson]

So the President is pressuring the Federal Reserve to lower interest rates.

[Vladimir Dutier]

Would that translate into lower interest rates on credit cards?

[Gayle King]

Well, it does actually, because the Federal Reserve controls short term interest rates and those do translate to credit card interest rates that are charged. Of course, when the Fed goes down, say by a quarter of a percentage point, the credit card companies, they don't go down by a quarter of a percent percentage point, exactly. Some fraction of that. And I think that what's also important is the Fed is trying to balance that help for consumers with the fact that when you have lower interest rates, it boosts economic growth and it can create inflation.

[Mark]

Okay? So Mark, we know that people who have high credit card interest rates, they struggle so much to get out of the hole. How likely do you think it is now that the President. President is actually behind it that this could actually see some light of day, that there could be some bipartisan effort to cap credit card interest rates at 10% at least for a year?

[Producer/Co-host Mark]

I mean, it could happen. Who knows? I'm not going to say it is or it isn't, but I think like you said in the piece, it's Only for a year. So I'm not sure how much that's. Eventually, you know, how much that's going to move the needle in the long run in terms of people's debt load and their habits. So, you know, yeah, it sounds good on the surface, but it's only for a year.

[Mark]

I know that's the, that's a key. Also, please note, everybody, that the big financial service companies and the credit unions that offer credit cards to you, they're going to push back on.

[Producer/Co-host Mark]

Oh, yeah.

[Mark]

Okay. So these companies are going to be lobbying hard, and they already have been lobbying hard. But I read a, it was, I, I got to pull this out for you. I read a statement from the former NCUA chairman. Okay.

[Jill Schlesinger]

By the way, this guy's name, ncu.

[Mark]

Is the National Credit Union Association. This guy's name is Dennis Dollar. I swear to God, I did not make that up. Okay, so double D, D$Dennis. Okay. So what he said was the president cannot set interest rates on a credit card any more than he can set the fed funds rate. He also said, listen to this, that the organizations that offer these cards will.

[Jill Schlesinger]

Not be able to offer them to.

[Mark]

People if they can't have high enough interest rates, that they will not be able to offer credit to riskier borrowers and those with lower incomes and lower credit scores. And so they're pushing back and the industry is going to push back. And let me tell you something, this is not to be taken lightly. The financial services industry does a ton of lobbying with the lawmakers in D.C. so what they're going to say is, they're going to say, like, hey, you want to drop the rate from 20 to 10, fine, we're not going to be able to offer your constituents, your voters as much credit. And by the way, if they don't get credit, there's two possible outcomes. They won't make purchases and that might hurt the economy or they're going to turn to less regulated, costlier alternatives to credit cards, maybe like buy now, pay later plans. So they're going to, they're coming out hard on this. There is no doubt. So that's one thing we don't know. Whether it's going to happen or not, if you're carrying credit card balances, you know what you have to do. You got to go highest interest to lowest interest. Now, Mark, let us turn to the Federal Reserve. Now, the Department of Justice has opened an investigation into Jerome Powell. Now, this investigation does stem from this crazy situation where the Fed was renovating its own building. Okay. They had like a huge project. It went over. I understand from people in the know that the Fed building was disgusting. It was really known to be a terrible building. They hadn't renovated in a long time. They did this long term construction project. There's been cost overruns. Chairman Powell was dragged out before, I think probably the Senate Banking Committee and maybe the House as well, that subcommittee. And he says this is why it happened. And so the allegation is he lied before Congress about the nature of the cost overruns.

[Producer/Co-host Mark]

Okay, so Mark, big picture, don't do renovations.

[Mark]

The big picture is every renovation project goes over. The DOJ drops subpoenas on a Friday, Sunday night.

[Jill Schlesinger]

Did you see that Powell video?

[Mark]

He went off and basically said in a two minute video that, quote, this.

[Jill Schlesinger]

New threat is not about my testimony.

[Mark]

Last June or about the renovation of the Federal Reserve buildings and it is not about Congress's oversight role. The Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts.

[Jill Schlesinger]

The threat of criminal charges is a.

[Mark]

Consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President. President. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or whether instead monetary policy will be directed by political pressure or intimidation. Mark, that was like some shot across the bow, right?

[Producer/Co-host Mark]

Yeah, it's, you know, we're kind of used to seeing him kind of just, you know, not have too much reaction to anything that's been taking place. He kind of just keeps quiet. But it seems, you know, it was almost like enough is enough. He had enough.

[Mark]

He had had it.

[Jill Schlesinger]

And he's going. He basically is like, yeah, I'm not doing this.

[Mark]

So just to remind everybody, Powell's term as Fed Chair is up in May. Don't forget it was eight years ago when Trump in his first administration appointed Powell as chair. Biden reappointed him for another four year term. So he's done in May as the chair.

[Jill Schlesinger]

And the thing is, when chairs fail.

[Mark]

Finish their term, what they'll often do is just say, oh, I may have extra time left as a governor because a Chair's term is four years. A governor's term is 14 years. Okay, so Chairman Powell serves until May, but he serves as a governor until January of 2028. He's got two more years left. Right. He had not said whether or not.

[Jill Schlesinger]

He'D be stepping down, but now I.

[Mark]

Felt like that video was also a little bit of a warning shot. And that was not only are you not going to intimidate me, but guess what?

[Jill Schlesinger]

I am going to be part of.

[Mark]

This voting member of the governors who sets policy.

[Jill Schlesinger]

Just because you have a new chairman.

[Mark]

Doesn'T mean that chairman can actually dictate policy.

[Jill Schlesinger]

It's still a vote.

[Mark]

And he, I think that Powell, this is totally, my opinion, is going to just absolutely sink in and be like, I think I'll stick around here for a while. Let's just see. So why is the Fed's independence so important? Listen, this is an expectation by global investors because why?

[Jill Schlesinger]

Because politicians, when they are in control.

[Mark]

Of interest rates, what they'll normally do is they'll be like, oh, let's put push interest rates down. It helps economic growth, it makes people happy. But you know what?

[Jill Schlesinger]

Over the long term, that ability of.

[Mark]

Politicians to push, push down interest rates also can create inflation and it is very difficult to fight it, as we have learned. If you're really interested in this topic, there's a great Paul Krugman post on Substack showing the example of what happened in Turkey when politicians took over interest rates, which is essentially they pushed interest rates down and inflation was soaring. So doesn't work as well. Anyway, this is all a lot of drama. I don't know what's gonna happen next. But if you've got questions about the Fed, if you've got questions about interest rates and how they impact your lives and how you are going to navigate what happens next in your own financial journey, we'd love for you to take a little bit of a stroll on the jillonmoney.com website. There you will find all of our content, our free weekly newsletter, and of course, our subscription service, Jill on Money Live, where you have access to live quarterly webinars. 45 bucks will get you all four.

[Jill Schlesinger]

Of those webinars over the next 12 months.

[Mark]

If you just want to buy one webinar at a time, you can do that for 15 bucks. Our upcoming webinar is with the Roth king Ed Slott. Thursday, February 26th with Ed Slott. He is the king of Roth. You know what, Mark? If I could like make a sweatshirt or a T shirt, I would have, like something like a crown on Ed Slott's head and then him wearing a T shirt that says King of the Roth. How do you feel about that?

[Producer/Co-host Mark]

I'm on board. You know, I think. When did we first have Ed on, like, well over a decade ago. Oh, yeah, it was at that point that I I bought all in on the Roth and I look at my Roth balances now and I'm like, that's because of Ed.

[Jill Schlesinger]

Mm.

[Mark]

Ed converted us. Ed evangelicalized the Roth to us and we are grateful for him for that. Anyway, February 26th Ed Slott just go to jillonmoney.com scroll down to Jill on Money Live and you will see how you can be part of the Ed Slot webinar. Maybe you just want to buy it in the aftermath of having the webinar air okay, you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Of course, we always, always ask that you try to lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

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[Nate Burleson]

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[Vladimir Dutier]

I've been turning down interviews all week. Hoda Kapi reached out. Oprah George Stephanopoulos. So I said no. I was booked on the Deitch podcast before the Taylor Swift phenomenon. I must live up to my responsibility.

[Nate Burleson]

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