In Trump’s announcement of the plan on Truth Social, he said he plans for the 10% credit card cap to last one year and start Jan. 20. He first suggested this idea during his 2024 campaign and said it’s meant to lower high interest rates and make borrowing cheaper for consumers.

The announcement had an immediate effect on the market. Some major U.S. credit card companies saw their stock prices drop when the New York Stock Exchange opened on Monday. Why the drop? Banks and investors may be worried about how much money they could lose if interest rates are cut so sharply.

Credit cards and credit card debt are very profitable for the financial industry.💰 The average interest rate stood at 22.83 percent in August, according to the Federal Reserve, up from 16.28 percent in 2020.

A 10% credit card rate cap would save consumers a significant amount of money. It would also cause banks to lose money, which could then fall on consumers to make up for the deficit.

Still, with around 216 million Americans holding at least one credit card, questions remain about how much this cap would actually benefit the average consumer.

Those that require credit frequently and struggle to pay it back on time would be most vulnerable.

Families and small business owners often rely on credit to cover everyday expenses or urgent needs. If banks become more cautious, these groups may be the first to be turned away when applying for credit.

If banks pull back, many Americans might lose access to regular credit, and some could end up turning to riskier, expensive lenders instead.

Americans relying more on less regulated lenders could also end up paying more interest.

And if a significant number of Americans cannot access credit from prominent lenders, banks could feel the hit, too. Most banks would likely lower credit limits, close higher-risk accounts, and reduce rewards programs because they wouldn’t be able to make enough money at that low interest rate.

Keep in mind that current regulations already allow for short-term or targeted interest rate relief when needed. Any move toward lower interest rates across the board would need to be carefully designed to make credit more affordable without making it harder for people to qualify to use credit cards.

At the end of the day, the idea sounds good, but it also comes with risks. Banks might reduce credit limits, cut rewards, or close higher-risk accounts, and some people could turn to more expensive lenders. Investors and banks could feel the impact as well. While the idea sounds promising, the details are still unclear, and the real effects on everyday Americans will depend on how the plan is put into action.