Billionaire investor Bill Ackman has sounded the alarm on Donald Trump’s newly announced 10% cap on credit card interest rates. While Ackman, a Trump supporter, acknowledged the president’s good intentions, he warned that the policy would lead to a “credit crunch” for millions of Americans. Trump announced the cap on Friday via Truth Social, stating it would begin on January 20 to stop companies from “ripping off” the public.
Ackman’s concern centers on the mathematics of lending. He explained that credit card companies charge high rates to offset the losses they incur from borrowers who default. If the rate is capped at 10%, it becomes mathematically impossible to lend profitably to anyone with less-than-perfect credit. Ackman predicted that banks would respond by canceling millions of cards, leaving vulnerable Americans without access to emergency funds.
The banking industry echoed these fears in a joint statement. Organizations like the American Bankers Association warned that the cap would “reduce credit availability” and hurt small business owners. They argued that the policy ignores the reality of risk in the financial system and would ultimately drive consumers toward unregulated, high-cost alternatives.
On the political front, the move has drawn mixed reviews. Senator Josh Hawley, a populist Republican, called the cap a “fantastic idea,” while Senator Elizabeth Warren dismissed it as legally void without Congressional action. Warren criticized Trump for making a splashy announcement without the legislative backing to ensure it actually happens.
As the debt clock ticks—with U.S. credit card balances now at $1.17 trillion—the pressure to act is real. Trump’s proposal addresses the symptoms of this debt crisis but may ignore the underlying causes. The coming weeks will reveal whether the administration can navigate the economic minefield it has just stepped into.
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