Bipartisan Bill Would Cap Credit Card Interest Rates at 10% as Average APRs Hit a Record 25.2%

The gap between what Americans earn on their savings and what they pay on their credit card debt has never been wider. With the average annual percentage rate on general-purpose credit cards reaching a record 25.2% in 2025, while the federal funds rate sits at 3.50% to 3.75%, a bipartisan group of lawmakers is pushing legislation that would fundamentally reshape the economics of consumer lending by capping credit card interest rates at 10%.

The proposal, which has drawn support from members on both sides of the aisle, arrives at a moment when the credit card debt crisis has reached dimensions that few economists anticipated. Total revolving consumer debt in the United States now stands at approximately $1.233 trillion, according to the Federal Reserve Bank of New York, the highest level ever recorded. Americans are collectively paying an estimated $160 billion per year in credit card interest charges alone.

The Numbers Behind the Crisis

The Consumer Financial Protection Bureau's latest Credit Card Market Report, published in January 2026, paints a troubling picture. The average APR on general-purpose credit cards climbed to 25.2% in 2024, the most recent full year of data, while private label cards charged an average of 31.3%. Both figures represent the highest rates since the CFPB began tracking them in 2015.

Those rates exist in a context that makes them even more punishing. Credit card balances have surged by $463 billion since the first quarter of 2021, when pandemic-era savings and stimulus payments briefly pushed revolving debt to a low of $770 billion. In just four years, Americans have added 60% more credit card debt, a pace of accumulation without precedent in the modern financial system.

Perhaps most alarming is the share of cardholders making only the minimum payment each month, which has climbed to its highest level since at least 2015. Minimum payments are designed to keep accounts current while maximizing interest income for the lender. A cardholder carrying a $10,000 balance at 25.2% APR who pays only the minimum would take more than 30 years to pay off the debt and would pay roughly $22,000 in interest, more than double the original balance.

What the Bill Would Do

The proposed legislation would impose a statutory ceiling of 10% on the interest rate that any credit card issuer can charge. The cap would apply to all general-purpose and private label credit cards issued by banks, credit unions, and other financial institutions. Existing balances would be subject to the new cap within 90 days of the law's enactment.

Supporters of the bill argue that the current interest rate environment represents a market failure. While the Federal Reserve has cut its benchmark rate from a peak of 5.25% to 3.50% over the past 18 months, credit card APRs have barely budged. The average spread between the federal funds rate and credit card APRs has widened to more than 21 percentage points, compared to a historical average of roughly 12 to 14 points.

"Credit card companies are charging rates that would make a loan shark blush," said one of the bill's sponsors during a press conference. "The average working family is paying a quarter of every dollar they borrow in interest. That is not a functioning market. That is exploitation."

The Banking Industry's Response

The American Bankers Association and the Consumer Bankers Association have come out strongly against the proposal, arguing that interest rate caps would reduce access to credit, particularly for consumers with lower credit scores who represent higher default risk.

The industry's argument rests on basic lending economics: if issuers cannot charge rates that compensate for the risk of default, they will simply stop extending credit to riskier borrowers. Studies of historical interest rate caps, including usury laws that existed in many states before federal preemption, have found evidence of reduced credit availability when binding caps are imposed.

"A 10% cap would effectively eliminate credit cards for 40 to 50 million Americans," a banking industry representative argued. "The cost of funds, fraud losses, operating expenses, and credit losses for subprime cardholders exceed 10% even before any profit margin."

The industry also points to the competitive structure of the credit card market. With more than 4,000 issuers in the United States, there is no shortage of competition. The argument is that if rates were excessive relative to the true cost of lending, competitors would undercut each other until rates fell to a competitive equilibrium.

The Historical Precedent

Interest rate caps on consumer lending are not a new concept. For most of American history, state usury laws limited the rates that lenders could charge. Those limits were effectively preempted by the Supreme Court's 1978 decision in Marquette National Bank v. First of Omaha Service Corp., which allowed banks to export the interest rate laws of the state where they were headquartered to borrowers nationwide.

The decision led to a concentration of credit card operations in states with no usury limits, particularly Delaware and South Dakota. Credit card APRs, which averaged roughly 17% in the early 1990s, have climbed steadily since, even as the federal funds rate has fluctuated dramatically.

Several other countries maintain effective caps on consumer lending rates. The European Union, for example, has various national caps that typically limit consumer credit rates to between 15% and 20%. Japan caps consumer lending rates at 20%. Canada limits rates to 35% APR under a law updated in 2024, down from a previous cap of 47%.

The Credit Card Debt Spiral

The legislation has gained traction in part because the human toll of high-interest credit card debt has become increasingly visible. Delinquency rates on credit card accounts have been rising steadily, with the share of balances 90 or more days past due climbing to 2.1% in the third quarter of 2025, the highest level since 2012.

Financial counselors report a surge in clients struggling with credit card debt. The National Foundation for Credit Counseling noted that the average client seeking help now carries more than $28,000 in unsecured debt, up from $22,000 just two years ago.

The problem is particularly acute for younger Americans. Borrowers between the ages of 18 and 29 have seen the fastest growth in credit card debt over the past three years, driven by a combination of rising costs of living, stagnant entry-level wages, and the normalization of credit-fueled consumption through buy-now-pay-later services and social media-driven spending culture.

The Likelihood of Passage

Despite bipartisan support, the bill faces steep odds in Congress. The banking industry is one of the most powerful lobbying forces in Washington, and previous attempts to impose rate caps have consistently been defeated. The industry spent more than $200 million on lobbying and campaign contributions in the 2024 election cycle alone.

Even if the bill does not pass in its current form, its introduction has elevated the issue of credit card pricing into the mainstream political conversation. With consumer debt at record levels and credit card interest rates at all-time highs, the political pressure on the industry to justify its pricing is unlikely to dissipate.

For the 190 million Americans who carry a credit card, the debate is more than academic. At 25.2% APR, every dollar of unpaid balance generates a quarter in annual interest. For a nation carrying $1.2 trillion in revolving debt, that equation adds up to a staggering transfer of wealth from borrowers to lenders, one that shows no signs of reversing on its own.