Credit card debt is placing a growing strain on millions of Americans, with rising interest rates intensifying the financial burden for those already struggling.
Selena Cooper, 26, a former paralegal at the Social Security Administration, is one of many affected. She lost her permanent job after the US government shutdown a few months ago, leaving her without a stable income. Missed payments since October have caused her credit card debt to rise to $6,000 across three cards. Last month, her card issuers Capital One and American Express raised her interest rates due to late payments. Cooper said her Capital One rate doubled to 16%, while her Amex jumped from 10% to 18%.
Credit card interest rates have caught the attention of US President Donald Trump. Last week, he proposed capping rates at 10% for one year starting January 20. Cooper said the measure “would help a little, but it’s still not going to get me out of debt.” She is now relying on her photography business for income, which covers small bills but not her credit card balances.
US credit card rates have been rising steadily, averaging about 22% in November, up from 13% a decade ago, according to Federal Reserve data. Around 37% of adults carry a credit card balance, and total credit card debt in the country exceeds $1 trillion.
Experts say the Trump proposal could ease some of the pressure on consumers, but banks and analysts warn it may have unintended consequences. Major lenders, including JP Morgan and Citigroup, say a rate cap could reduce access to credit for higher-risk borrowers. “People will lose access to credit on a very, very extensive and broad basis, especially the people who need it the most,” warned JP Morgan CFO Jeremy Barnum. Citigroup CEO Jane Fraser added that the plan could affect consumer spending nationwide.
Some economists caution that a cap alone may not solve the problem for struggling borrowers. Benedict Guttman-Kenney, a finance professor at Rice University, said banks could respond by limiting credit to people with lower scores or increasing fees, offsetting any benefits. However, research suggests there is potential for significant savings. A Vanderbilt University study found Americans could save roughly $100 billion a year in interest payments if a 10% cap were implemented.
Morgan, 31, who asked to use only her first name, said the proposal could help. She has accumulated $6,700 in credit card debt while covering childcare for her two-year-old, relying on her husband’s military income for other expenses. She said a rate cap would be “a step in the right direction” and one of the few measures prioritizing people over businesses.
The idea of capping credit card rates has bipartisan support, with senators including Josh Hawley, Bernie Sanders, and Elizabeth Warren backing legislation to set a 10% limit. House Speaker Mike Johnson, however, expressed caution, warning of “negative secondary effects” on lending.
While the proposal has gained attention, its future remains uncertain as banks continue to lobby against it. Analysts say the administration and Congress would need to act decisively for any meaningful relief to reach Americans facing mounting credit card debt.
