What a 10% Credit Card Rate Cap Could Mean for Homeowners

The cost of borrowing money is sky-high these days, from mortgage rates to interest rates on credit cards.

In an effort to alleviate some financial strain plaguing Americans, President Trump proposed a 10% cap on credit card interest rates this last week. How or if credit card companies will comply remains to be seen, but in his Truth Social post, he pledged to have a plan in place by Jan. 20, the one-year anniversary of the start of his second term.

While capping credit card interest would be welcome news for many, economists argue that the move could backfire. Repercussions range from limiting access to credit, reducing rewards, and steering borrowers toward other forms of debt.

If you own a home, a better interest rate would absolutely come in handy, but reexamining your money habits would take you a lot further.

Why interest rates aren’t the real issue

Credit card balances rose $24 billion during the third quarter of 2025 to $1.23 trillion. That's up 5.75% from the year before.

With that in mind, a 10% cap sounds rather appealing, yet financial experts argue that the real problem isn't the current interest rate—it's the relationship homeowners have with debt.

“I've seen this firsthand working with thousands of real estate transactions: the families who struggle aren't struggling because of a 20% vs. 10% rate. They're struggling because they're using revolving credit to fund their lifestyle,” says Ricky Carruth, chief housing analyst at RLTYco in Gulf Shores, AL. 

Ask yourself truthfully why you're in credit card debt. Are you covering genuine emergencies, or subsidizing a lifestyle you can't afford? Did your roof need repairing or did you buy an expensive couch?

“Here's the hard truth—if someone's behavioral relationship with credit doesn't change, they'll just increase their balances up to new limits and end up in the same position—just with more debt at a lower rate,” explains Carruth.

Still, for those who can honestly say their debt is the price paid for being a homeowner and helped them navigate an unforeseen, yet crucial repair, an interest cap could help.

“For someone carrying $10,000 in credit card debt, dropping from 24% to 10% saves about $1,400 annually. That's real money that could fund two to three months of home insurance or build an emergency fund,” says Carruth.

Cheaper credit comes at a cost

The trade-offs of a proposed credit card interest rate cap could be significant, according to Carruth.

Banks, after all, are not charities; any limits on interest revenue would likely be offset elsewhere. That could mean higher fees and annual charges, tighter credit approval standards, lower credit limits, or even the elimination of rewards programs altogether.

With that in mind, the people Trump’s proposal is meant to help—homeowners with limited cash flow—are the same ones who'll likely lose access to credit entirely. 

“If you're living paycheck-to-paycheck and currently relying on a $5,000 credit line for emergencies, you might find yourself with a $2,000 limit or denied completely under stricter underwriting,” explains Carruth.

Rather than relying on policy changes, homeowners would be better served by focusing on what they can control: building three to six months' worth of expenses in reserves and treating credit cards as a payment method—not a loan product.

“I’m a firm believer in the power of compound thinking—small disciplines practiced consistently that create exponential results over time,” says Carruth.

What to do if the cap passes

If Trump’s cap proposal passes and you come into some additional savings every month, Carruth recommends you put that savings into a dedicated home maintenance fund. 

“Don't let it disappear into lifestyle inflation. Set up a separate savings account, automate the transfer, and pretend that money doesn't exist until you need a new roof or HVAC system,” says Carruth.

He adds that those who build real wealth in real estate are the ones who weather market crashes and rate spikes—not the ones with the best credit card rates. 

“They're the people who decide to live below their means, save aggressively, and treat their home as a long-term asset that requires maintenance—not just an ATM machine,” explains Carruth.