Interest Rate Caps on Credit Cards: Policy Issues

Updated May 22, 2025March 10, 2026 (IF12861)

Congress has paid attention to the costs associated with credit cards, one of the most popular payment options for consumers today. For example, the 118^th Congress debated whether to reform the way credit card swipe fees are processed (S. 1838/H.R. 3881) and to what extent the liability for fraudulent payments should be borne by the customer or the financial institution (H.R. 9303/S. 4943). Another policy discussion pertains to proposed limitations to the interest rates that financial institutions charge for credit card purchases. In the 119^th Congress, bicameral legislation, S. 381 and H.R. 1944, would cap credit card annual percentage rates at 10%. While the cost of financial services is a perennial topic of congressional debate, Congress has recently paid particular attention to the costs associated with credit cards, one of the most popular payment options for consumers. This In Focus provides background on the consumer credit card market and discusses policy issues related to credit card interest rate regulation.

Policymakers are currently considering proposals to cap the interest rates that financial institutions charge for credit card purchases. For example, in the 119^th Congress various bills (such as those discussed below) would cap credit card annual percentage rates (APRs) at 10% until January 2031 (S. 381, H.R. 1944) or cap fee and interest or APRs for most forms of consumer credit at 36% (S. 2781, S. 3793). President Trump and other Administration officials have issued statements calling for a limit on interest rates on cards to 10% for one year. Any restrictions on interest rates would generally require legislation in order to be binding.

Interest rates are typically regulated at the state level, but in some circumstances, federal law caps the interest rate a financial institution can charge. Currently, there is no general national cap on card interest rates.

The Consumer Credit Card Market

Various Federal Reserve studies have indicated that credit cards are pervasive in the United States. As of 2024, 81% of adult Americans had credit cards. In 2022, consumer credit cards processed $6.3 trillion in payments: $4.0 trillion from general purpose credit cards and $2.3 trillion from private label credit cards. In 2024, credit cards averaged the largest number of payments among consumer payment types. Despite widespread adoption of traditional alternatives such as debit cards and growing uptake of newer payment apps, consumers value credit cards as a payment option due to their relative security, widespread acceptance, and convenience.

Credit Card Market Structure

The credit card market involves up to six different types of market participants: consumers who purchase something; merchants who sell things, banks that issue cards, banks that work with merchants to accept payments, payment networks that connect financial institutions and provide the infrastructure for transactions, and payment processing firms that facilitate transactions. Regulations on interest rates would affect each market participant in a different way.

Credit cards are generally (but not always) issued by large financial institutions. According to Nilson (an industry analyst), the five largest banks in the United States comprised over two-thirds of the credit card market in 2024.

Bank Revenue from Credit Cards

Interest income from credit cards is a significant revenue source for banks. For example, according to bank call report data, among the five largest card-issuing banks, interest income from credit cards totaled around $120 billion in 2025, comprising around a third of total interest income. The entire banking industry reported $174 billion in credit card interest income in 2024 (the most recent data as of February 2026). Recent research by the Federal Reserve Bank of New York found that credit card profitability, measured by returns on as assets, has increased. The banking industry argues that limiting interest rates would have a significant impact on credit card banking operations.

Consumer Debt

One policy issue is the level of credit card debt held by Americans. As of Q3 2025, Americans helda financial institution can charge.

Usury is a term that can refer to charging perceived unreasonably high interest rates or rates in excess of legal limits in cases where such limits are in place. Some policymakers apply this term to rates they think should be capped. Currently, there is no general national cap on interest rates, and a national usury cap would require an act of Congress.

This In Focus briefly describes the state of the consumer credit card market and discusses policy issues related to credit card interest rates.

The Consumer Credit Card Market

According to the Federal Reserve, as of 2023, 82% of Americans had credit cards. Americans hold a collective $1.2 a collective $1.2 trillion of outstanding credit card debt, the fourth-highestlargest category of household debt. Credit card debt is different than the other largest forms of consumer debt. It is not secured by assets (neither are student loans); rather, it is open-ended, and credit cards are generally used as a general purpose payment method. (A minority of cards are private label.) Some policymakers are concerned about the level of credit card debt because of attributes of the credit card market category of household debt. On average, cardholders held $5,300 in credit card debt at the end of 2022. In 2022, Americans paid $130 billion in interest and fees toward their credit cards. The top 10 largest credit card companies hold 81% of total credit card outstanding balances. The share of balance. The share of balances that are 90-plus days delinquent for credit cards has increased from a recent low of 7.6% in third quarterQ3 2022 to 11.4% in fourth quarter 202412.4% in Q3 2025, the highest rate since 20142011. This statistic includes debt in collections or charged off (written off) by the lender. Similar trends are present in the 30-days delinquency rate, and the most recent data (Q3 2025) showed flattening or declines. These delinquencies are concentrated among subprime borrowers. Some have raised concerns with the amount of credit card interest paid by consumers over time. . This statistic includes severely derogatory debt, such as charge-offs. These delinquencies were concentrated among subprime borrowers. In response to these delinquencies, a Federal Reserve survey indicated that more banks tightened their underwriting standards for credit cards.

Figure 1 shows the distribution of APRs, Figure 1 shows the distribution of APRs by credit score as of 2022 for newby credit score as of 2022 for general purpose credit cards. Consumers with lower creditworthiness generally have higher APRs, while the overall average APR is 19%.

25%. Such APRs have increased by roughly five percentage points since Q2 2022 alongside increases in bank borrowing costs.

Figure 1. Average APRs by Credit Score: 2022 2024 General Purpose Credit Cards

Source: Consumer Financial Protection Bureau (CFPB).

Legislative Framework for Interest Rate Regulation

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Relevant Statutory Framework

The Truth in Lending Act (TILA, 15 U.S.C. §§1601 et seq) requires creditors to disclose terms and costs of consumer credit. Currently, there is no provision in TILA that caps APRs for most consumer lending. Part ofA section in the Dodd-Frank Act (12 U.S.C. §5517) limits the CFPBrestricts the Consumer Financial Protection Bureau from imposing "usury limits … unless explicitly authorized by law." For more on TILA, see CRS In Focus IF12769, Overview of the Truth in Lending Act, by Karl E. Schneider.

Currently, federal law does not broadly cap APRs for most consumer lending, but some provisions apply limited caps. The Military Lending Act caps APRs at 36% on many consumer credit products for active-duty servicemembers, their spouses, and dependents (10 U.S.C. §987(b)). The ServiceServicemembers Civil Relief Act enables active-duty servicemembers to have the interest rates on their credit cards and other forms of consumer debt reduced to 6% during their tours of duty (50 U.S.C. §503901). Federal credit unions are typically statutorily restricted to an APR cap of 15%, but such a cap can be increased in certain circumstances if prevailing interest rate levels threaten the safety and soundness of credit unions (12 U.S.C. §1757). In February 2026, the National Credit Union Administration voted to maintain a higher ceiling of 18%, which is now set to expire in September 2027. This 18% ceiling has been in effect since 1987. ).

State laws generally determine any applicable interest rate limits on bank credit cards based on where financial institutions' headquarters, and it does not matter where a consumer resides are headquartered, not where consumers reside. Currently, many credit card companies are based in either Delaware or South Dakota due to their specific usury lawsrelatively lenient interest rate regulations. This applies to banks as well as nonbanks as a result of a recent Office of the Comptroller of the Currency rule. For more on this rule. For more on this issue, see CRS Legal Sidebar LSB10512, Federal Banking Regulator Finalizes Rule on State Usury Laws, by Jay B. Sykes.

Legislation in the 119^th Congress

In the 119^th Congress, S. 381 and H.R. 1944 would cap credit card APRs at 10%. If a credit card company violates these provisions, it would have to forfeit the payment from those violations and potentially be subject to additional enforcement action. These provisions would be in effect until January 2031. S.Amdt. 2239 to the GENIUS Act (S. 1582) would enact similar provisions as these previously discussed bills.

Policy Issues

Consequences of Usury Caps on Credit Cards

There are a range of consequences that a usury cap could—but may not necessarily—have on financial markets. Imposing a usury cap could affect access to credit from traditional sources or the way lenders price risk for riskier borrowers. Some researchers have separately argued that a usury cap would result in a large swathe of less creditworthy borrowers being denied credit. Research from economists at the World Bank on interest rate caps across the globe argued they were a "blunt instrument" and resulted in a decline in access to credit and increased commission or other fees. Further, research from economists on payday loans in Illinois and evidence from 19^th-century state interest rate cap laws found declines in lending in response to usury laws. For short-term credit, borrowers might increasingly rely on potentially riskier credit sources outside of the banking system. Usury caps may also likely reduce profits for certain financial institutions as a result of decreased number of loans and lower APRs on some underwritten loans.

At the same time, some research points to the benefits, which could act as a form of social insurance, protecting those that receive negative income shocks from the negative sides of credit. Some economists argue that reducing credit availability as a result of a usury cap could benefit some consumers by preventing them from taking out costly forms of credit. Similar arguments are made for overdraft and payday loans. Researchers argued that in response to the usury cap imposed by the Military Lending Act (36%), lending to servicemembers from "mainstream credit products" has not declined.

Related Regulatory and Legislative Activity

In March 2024, the CFPB finalized a rule that would cap credit card late fees at $8 and eliminate inflation adjustments for that amount. This rule was recently vacated by a federal court in Chamber of Commerce vs. CFPB, as the CFPB under new leadership filed a joint motion to vacate, arguing that the rule violated the CARD Act. This action reflected a reported broader policy position by new acting CFPB leadership that the CFPB "shall not engage in attempts to create price controls."

The policy goal associated with usury caps is presumably to lower the cost of borrowing funds. Another potential way to do this could be to facilitate alternatives to credit cards, allowing consumers to potentially access cash cheaper. For example, small dollar personal loans, overdraft, earned-wage access (EWA), and buy now, pay later (BNPL) are among different products that could be considered alternatives to credit cards, with some potential advantages. For example, employer-integrated EWA enables employees to use money that they have already earned. Certain BNPL "Pay in 4" products generally do not roll over with interest and are often limited to four payments. Despite their purported convenience and other potential benefits, some argue that these products encourage a cycle of debt.

During the Biden Administration, the CFPB took steps to further regulate some of these products, which possibly constrained their further growth. The CFPB has issued a proposed interpretative rule and an interpretative rule that EWA products and BNPL, respectively, constituted credit and that these companies must offer protections and disclosures associated with TILA. Additionally, the CFPB finalized a rule in December 2024 that mandated that financial institutions either cap overdraft fees at $5 (or a higher level to cover costs and losses) or follow certain provisions in Regulations E and Z for overdraft. In general, overdraft fees from large institutions declined from 2020 to 2022.

Critics of these policy changes argue that they may increase the cost of compliance and reduce consumer access to these products. Other stakeholders contend that such changes might improve consumer welfare through additional protections. The future of these policy changes is uncertain. The proposed EWA interpretative rule was never finalized, and currently EWA disclosures and most other protections are regulated by states. New CFPB leadership has stated in a recent court filing that it is planning to revoke the BNPL interpretative rule, which is being challenged by the Financial Technology Association in court. S.J.Res. 18, which Congress passed and President Trump signed, used the Congressional Review Act to overturn the CFPB overdraft rule.

In the 118^th Congress, H.R. 7428 would have exempted EWA from being classified as credit subject to TILA disclosures, mandated other disclosure requirements, and required EWA firms to provide fee-free versions of their services. H.R. 8356 would have provided safe harbor from TILA enforcement actions for small dollar loan products (under $3,500) pending certain underwriting and other requirements.

For more on these alternative financial products, see:

• CRS In Focus IF11460, Overdraft: Payment Service or Small-Dollar Credit?, by Andrew P. Scott;
• CRS In Focus IF12727, Earned Wage Access Products, by Paul Tierno and Karl E. Schneider; and
• CRS In Focus IF12734, Rapidly Growing "Buy Now, Pay Later" (BNPL) Financing: Market Developments and Policy Issues, by Karl E. Schneider and Paul Tierno.