US Credit Card Interest Rate Cap Proposal
On January 10, US President Donald Trump proposed a one-year cap on credit card interest rates at 10 per cent, effective January 20, 2026. This measure is intended to protect consumers from high borrowing costs, with current rates ranging from 20-30 per cent, which Trump criticized as exploitative.
Implications for India
The proposal has caught the attention of Indian credit cardholders, who face interest rates up to 42 per cent annually. It raises questions on whether India might consider a similar measure.
Challenges in Implementation
- Enacting this proposal requires US Congress approval and cooperation from financial regulators.
- Previous attempts to cap interest rates at 10 per cent have faced resistance from the financial industry and have not been passed.
Potential Impact of Interest Rate Cap
- Analysts warn a cap could reduce credit access, especially for high-risk borrowers.
- Lenders might scale back card issuance or reduce card benefits and rewards.
- It could ease debt burdens by lowering borrowing costs for heavily indebted cardholders.
Credit Card Scenario in India
Indian credit-card interest rates vary significantly, with annual rates ranging from 36-48 per cent. A 2024 Supreme Court decision allows banks to charge over 30 per cent on dues.
Consumer Behavior and Regulatory Context
- Credit card incentives in India include rewards, loan offers, and benefits.
- RBI monitors the sector but allows banks to set their own interest rates.
Market Trends
Credit card use in India is increasing, with outstanding debt and spending on the rise. As of November 2025, there are 11.5 crore outstanding credit cards, reflecting a 7.1 per cent year-on-year growth.
- Public sector banks lead the issuance momentum with a 7.6 per cent y-o-y growth.
- Credit card outstandings were Rs 2.96 lakh crore in November 2025, up from Rs 2.88 lakh crore the previous year.
Regulatory Focus in India
Unlike the US, India’s regulatory focus is on consumer awareness, risk management, and financial stability, rather than imposing interest rate caps. This reflects the differences in market structures and regulatory priorities between the two countries.
