By Jill Schlesinger | On Money
Although credit has been used throughout history, the first “modern” card dates back to 1950, when Diners Club issued a one available for use at several locations.
Banks soon followed, issuing cards throughout the 1950s. At that time, it was difficult for minorities and women to qualify, but that changed in 1974, with the signing of The Equal Credit Opportunity Act of 1974 (ECOA).
The law prevented creditors from discriminating against an applicant because of race, color, religion, national origin, sex, marital status, age or participation in public assistance programs.
Fifty years since the signing of the ECOA, use of credit cards has become ubiquitous in the economy. The upside is that Americans are able to access funds in an efficient and convenient way, and the majority pay off their balances in full each month.
However 46 percent of cardholders carried a balance on a credit card for at least one month in the past year, according to a May 2025 Federal Reserve study, using 2024 data.
Forty-six may seem like a lot, but it represents significant progress, down 11 percentage points since 2015. Still, outstanding credit card debt stood at $1.233 trillion as of the end of September 2025, according to the most recent data from the Federal Reserve Bank of New York.
The sheer numbers involved mean that when the president recently posted, “We will no longer let the American Public be ripped off by credit card companies that are charging interest rates of 20 to 30%,” millions of those who carry credit balances were encouraged.
Trump wants credit card interest rates to be capped at 10% by January 20, the one-year anniversary of his swearing in as president.
Before we get ahead of ourselves, legal experts say that it would likely take congressional action to put a cap in place, and that is unlikely to occur before January 20.
Eventually, however, a cap could be possible, given that in February 2025, Senators Bernie Sanders and Josh Hawley put forth a bipartisan bill that attempted a 10% credit card interest rate cap. (The bill languished and went nowhere, as financial institutions successfully lobbied against any attempt to cap rates.)
How would an interest rate cap help consumers?
We don’t know whether Trump’s proposed cap would apply to existing balances or new credit, but with average credit card interest rates of around 20% and average balances running at over $6,500, a one-year halving of the rate on both existing and new balances would allow borrowers to reduce the amount of money going towards interest and pay off principal faster.
A September 20205 analysis by Vanderbilt University found that a 10% cap “would produce over $100 billion in annual savings.”
Not surprisingly, the organizations that represent and lobby for big card companies (The Bank Policy Institute, American Bankers Association, Consumer Bankers Association, Financial Services Forum and Independent Community Bankers of America) issued a joint statement that pushed back against the cap: “Evidence shows that a 10% interest rate cap would reduce credit availability and be devastating for millions of American families and small business owners who rely on and value their credit cards, the very consumers this proposal intends to help. If enacted, this cap would only drive consumers toward less regulated, more costly alternatives.”
Regardless of where we go next in the cap fight, the best bet for those carrying a balance is to prioritize the highest interest debt and put down as much as you possibly can on that amount. Be sure to cut yourself some slack in the process and try to take small steps towards reaching your goal of becoming credit card debt free.
Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.
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