$1.17 Trillion Debt Crisis: Trump Responds with Rate Cap

The sheer scale of America’s debt crisis—$1.17 trillion in credit card balances—has prompted a radical response from Donald Trump: a 10% interest rate cap. The former president cited the record debt figure in his Truth Social announcement, arguing that high interest rates are crushing American families. He set a start date of January 20 for the new policy, promising to bring relief to millions.
The debt number is staggering, having grown from $770 billion in 2021. This explosion in borrowing reflects the financial strain on households dealing with inflation and rising costs. Trump’s proposal aims to address this crisis head-on by slashing the cost of servicing that debt. By capping rates, he hopes to put money back into the pockets of consumers.
But the banking industry argues that the cap will make the problem worse. Major financial associations issued a statement warning that the policy would lead to a reduction in credit availability. They explained that if banks cannot charge market rates, they will simply stop lending. This would mean that families relying on credit cards to buy groceries or pay bills would be cut off, potentially driving them into bankruptcy.
Senator Elizabeth Warren was also critical, calling the announcement a “joke” without a legislative plan. She argued that Trump is offering a simplistic solution to a complex systemic problem. Warren urged for a more comprehensive approach that includes stronger consumer protections and wage growth.
Investor Bill Ackman added his voice to the concerns, warning that the cap would lead to mass card cancellations. He predicted that banks would move to protect their assets, leaving debtors without options. As the nation grapples with the $1.17 trillion crisis, the debate over the best solution is far from settled.