Notice ::
Is Credit Card Going to be Cheaper?
Nironjan Roy
- Update Time : Tuesday, February 10, 2026
- 11 Time
Credit cards are very popular among people in the USA and Canada. They can hardly think of living without using it. So this has become one of the most attractive investment opportunities for banks and other card issuers.
However, the bane of this essential financial product is its high interest rate, which puts a heavy financial burden on consumers while providing the source of good revenue for the card issuers.
Now discussion is going on about reducing interest rates on credit cards, as President Donald Trump has decided to put a temporary 10% interest rate cap on credit card lending.
While justifying the proposed maximum interest rate limit on credit cards, Trump has said that American households are already under economic pressure, which needs to be eased, and reducing the interest rate on credit cards is one option.
He has outspokenly commented in his social media post, “We will no longer let the American public be ripped off by credit card companies, which are charging interest rates of 20 to 30% and even more.” Trump’s contemplation of reducing the interest rate on credit cards is not new, as he threw out this idea during his presidential campaign in 2024.
Usually those who have low credit scores pay very high interest, while those who have good credit scores pay relatively less interest on credit cards.
Additionally, credit cardholders are required to pay an annual fee, whereas the card issuers receive a swipe fee, which is paid by retailers for every purchase charged to the credit card.
So, multiple sources of revenue are associated with the credit card business. Most banks try to justify that higher interest rate on credit cards because of higher default risk.
Exorbitantly high interest on credit cards always bears a dual inverse impact on the cardholders and issuers. Card issuers, which are mostly banks and financial institutions, consider credit card lending as brisk business with a source of significant revenue generation.
For example, a bank’s $100 billion lending in credit cards will fetch over $20 billion in revenue every year. This financial product is considered a sustainable asset, as the credit card balance is hardly paid off and rather keeps growing over years, with increasing uses and interest accumulation.
So, revenue generation from credit card lending is incremental and sustainable, although there is high default risk, which can, however, be mitigated with strict credit rating control and adequate provisioning policy.
Because of the high revenue generation scope, many large retailers, like Walmart, have introduced their own credit card, which they offer to the customers.
Credit cards result in a substantial financial burden for the consumers because of high interest rates, although this facility provides adequate affordability for the consumer, who can maintain a quality life regardless of their own income.
For example, a person with an annual income of $30,000 can afford a living standard of $100,000 using a credit card. In that situation, a person with a $100,000 credit card balance will have to pay $22,000 interest every year, which is equivalent to almost one year’s accommodation expense.
So, if a person’s annual income is $60,000, of which one-third is utilised towards payment of interest on a credit card. If applicable tax and other eligible deductions are taken into consideration, very little amount from income is left for meeting other living expenses, and there must be a deficit every year, which is met with further borrowing from credit cards. This consequence continues year after year.
Trump’s proposed 10% cap on credit card interest may bring great relief to most consumers. As reported in the media, a study has revealed that a 10% cap on interest rates on credit cards would save borrowers $100 billion a year in interest costs. Trump’s attempt to restrict interest on credit cards seems a very positive initiative from consumers’ perspective.
On the other hand, banks and other card issuers will, of course, be unhappy with an apprehension of losing sizeable revenue, which is now being reflected in the statement and opinion of banks’ senior executives.
Although President Trump has repeatedly said that he is going to limit interest rates on credit cards, the details on implementation have not been made clear yet.
Initially it was thought to be enforced through executive order but later indicated to get through Congress, which may procrastinate the process. Similarly, a temporary interest cap for one year was discussed without elaboration on whether the entire credit card balance or only the new balance will fall under the proposed 10% cap.
However, high interest is the most common concern of Americans, which Trump knows well, and thus he will most likely move ahead with his proposal for at least some interest rate cut instead of 10%, and if so, there is a likely possibility that credit cards are going to be cheaper.
Now a question arises: what impact may Bangladesh have from the 10% interest rate cap on credit cards in the USA? The answer is nothing; however, Bangladesh Bank may take this opportunity by binding the banks to comply with the 10% interest cap while issuing credit cards in US dollars.
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