President Trump recently proposed a one-year 10% cap on interest rates that American credit card companies can charge customers, a move that could provide relief to consumers currently facing rates often exceeding 20%.
- Trump proposed a 10% cap on credit card interest rates to help consumers paying high rates.
- Experts warn credit companies may refuse loans to borrowers with lower credit scores and raise other fees.
- Local shoppers welcomed the idea but many already avoid credit cards due to current high rates.
"It's the interest rates that seem to get me, and everybody else," said Misty Pope, a local shopper at Jackson Crossing Mall Tuesday afternoon.
For neighbors like Pope, the proposed cap could mean significant savings. When asked about the potential change, Pope said it "would mean a lot."
Another shopper called the proposal "wonderful" and "a good thing."
However, economics experts warn the plan may have unintended consequences.
"In one side, it does look like it could be good. You know, if you're now paying 22% interest rate on a credit card and it dropped down to 10%, you would definitely be paying a lot less money," said Dan Giedeman, a professor and department chair of economics at Grand Valley State University.
But Giedeman cautioned that when there's an upside, a downside typically follows.
"There's always a downside to everything, and this is where if I'm a credit card company and I'm told that I can only charge 10% interest rates, I might be willing to do that for very good borrowers," Giedeman said.
Good borrowers would likely need credit scores above a certain threshold. Those with lower scores could face new challenges.
"If you have a credit score that's maybe not poor but it's not great, say below 760, they may say 'We're just not willing to lend to you,'" Giedeman said.
The economics professor doesn't believe financial institutions will simply accept reduced profits from the interest rate cap.
"They're gonna look for other ways to make profits, so you might see an increase in say transaction fees," Giedeman said.
For consumers like Pope, who already tries to limit credit card use due to high interest rates, the proposal represents hope for relief.
"I try to stay away from it, exactly because of the interest rates," Pope said when asked if she avoids using credit cards due to current rates.
Pope acknowledged that while she can limit her credit card usage, "some people do rely on credit cards to get by."
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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