Trump Clashes with the Financial Leviathan 2: Congressional Investigation

On May 22, 2025, the Congressional Research Service released an analytical memo on the state of American credit cards in connection with the bicameral bills S. 381 and HR 1944 (introduced before Trump's similar initiative from January 2026), which propose capping annual percentage rates on credit cards at 10%. It notes that interest rates are typically regulated at the state level, but in some cases, federal law limits the rate a financial institution can charge, especially if there are suspicions of usurious rates. State legislation sets limits on interest rates for bank credit cards based on the financial institution's headquarters, and the consumer's place of residence is irrelevant. Currently, many credit card issuers are based either in Delaware or South Dakota due to their specific usury laws. This applies to both banks and non-bank organizations.

Currently, there is no general national cap on interest rates, and introducing a national usury cap would require corresponding legislation from Congress.

According to the Federal Reserve, as of 2023, 82% of Americans had credit cards. The total amount of outstanding credit card debt among Americans is $1.2 trillion, making it the fourth-largest category of household debt. On average, at the end of 2022, credit card debt amounted to $5,300 per person. In 2022, Americans paid $130 billion in interest and fees on their credit cards. The ten largest credit card issuers account for 81% of the total outstanding credit card debt. The share of credit card debt delinquent by more than 90 days rose from a recent low of 7.6% in the third quarter of 2022 to 11.4% in the fourth quarter of 2024, the highest level since 2014. This statistic includes seriously delinquent debt, such as charge-offs. These delinquencies were concentrated among borrowers with low credit scores. In response to these payment delinquencies, a Federal Reserve survey showed that more banks have tightened borrower creditworthiness standards when issuing credit cards.

Interest rates vary widely depending on the borrower category. Consumers with lower credit scores typically face higher annual percentage rates, up to 37%, VIP borrowers pay 12%, while the average annual percentage rate is 19%.

Some existing laws affect interest rates. The Military Lending Act caps the annual percentage rate at 36% on many consumer credit products for active-duty service members, their spouses, and dependents. The Servicemembers Civil Relief Act allows active-duty service members to reduce interest rates on credit cards and other consumer debts to 6% for the duration of their service. Federal credit unions are generally limited by law to an annual percentage rate of 15%, though this cap can be raised under certain circumstances if prevailing interest rate levels threaten the safety and soundness of credit unions.

However, the Congressional Research Service's position remains uncertain and even sympathetic to critics of usury caps. The Service believes that caps could affect access to credit from traditional sources or how lenders assess risks for riskier borrowers. It cites some researchers who argue that usury caps would result in a significant portion of less creditworthy borrowers being denied credit. Studies by World Bank economists on interest rate caps worldwide have shown that they are a "blunt instrument" that leads to reduced access to credit and increased fees or other charges.