The Trump 10% Credit Cap Is a Start — But Real Reform Requires Ending Lifelong Debt

10% FOR A YEAR IS JUST A NUDGE IN THE RIGHT DIRECTION. LET'S REALLY MOVE.

American households are drowning in credit card interest, but what’s more interesting is the form of drowning: quiet, slow-motion financial asphyxiation disguised as “credit access” and “rewards points.” When President Trump called for a temporary 10% ceiling on credit card interest rates, the banking lobby acted as though he had proposed a Bolshevik seizure of the financial system. In reality, the 10% cap is not a revolution; it’s a nudge in the right direction. If the United States truly wants to unleash the economic potential of the working class — the class that actually spends, builds, raises families, and keeps the domestic economy alive — real reform must go deeper.

The truth is that the modern American credit card system is not ancient capitalism. It isn’t even Reagan-era capitalism. The lifelong debt model is a relatively new invention — a late-1990s to 2000s engineering project built on FICO scores, securitization, minimum payment formulas, and behavioral gamification. Before then, American Express was king and you paid your bill in full at the end of each month. Credit was a convenience, not a sentence.

The shift began when the financial sector discovered that credit card risk is front-loaded. Almost all true default risk sits in the first few years of borrowing. After that, once the borrower has stabilized and continues to revolve a balance, the lender has likely recovered its principal and is coasting on yield. In other words, risk amortizes early; profit accumulates late.

This is the key to understanding the extraction cycle. Consider a simple example:

• Borrower takes on $10,000 of credit card debt

• APR sits at 20–28%, a range common in the United States today

Under a standard minimum payment formula (“interest + 1% principal”), amortization tables show:

APR	Time to Pay Off Minimum	Total Interest Paid	Total Paid
20%	~24.6 years	$15,650	$25,650
24%	~25.3 years	$18,887	$28,887
28%	~25.8 years	$22,138	$32,138

One can object: “But that assumes the debtor pays only minimums.” Yes — but minimum payments are not an accident. They are an engineered behavioral valve designed to prolong duration. Banks know exactly how few Americans aggressively amortize credit card balances. The system is designed to take advantage of that fact without ever stating it outright.

More interesting than payoff duration is the profit recovery timeline. If a borrower pays only interest (no principal), pure interest flow is:

• 20% APR = $2,000 per year

• 24% APR = $2,400 per year

• 28% APR = $2,800 per year

To recover the original $10,000 principal in interest alone takes:

• 20% → 5.0 years

• 24% → 4.17 years

• 28% → 3.57 years

Banks don’t need 25 years to justify these rates. They need 3–7 years to recover principal + profit. Everything after that — years 8 through 25 — is pure yield extraction on a borrower whose risk profile has already stabilized.

This is the part that matters politically: today’s credit card industry relies not on lending, but on duration-based monetization of working-class liquidity deficiencies. The bank doesn’t care what you bought — a transmission, a honeymoon, a set of tires, or groceries. It cares how long you revolve it. Duration equals yield. The longer the borrower breathes, the richer the extraction curve becomes.

President Trump’s 10% cap disrupts this only at the margins. A temporary ceiling slows the treadmill but doesn’t change the treadmill’s existence. It does not eliminate principal, it does not wipe interest, it does not retroactively correct past exploitation, and it does not break the securitization machine. It merely compresses the yield curve. And yet the banking lobby is furious, because the cap targets the fat years — the years in which the bank has already been paid back and is now living off financial rent.

To understand how new this is, consider history. From the 1950s through the early 1980s, credit cards functioned more like American Express charge cards: you spent, then you paid in full monthly. In that world, household debt didn’t metastasize into multi-decade obligations. A $10,000 vacation wasn’t rented for 25 years with interest. Families were not permanently in arrears to Visa. Credit didn’t become a financial lifestyle. It was a bridge, not a mortgage on one’s past consumption.

The revolution came through three developments: FICO score standardization, securitization of credit card receivables, and the lowering of minimum payments. Once banks could reliably price risk and sell debt streams into structured finance products, revolving credit transformed into a bond-like product generating steady yield off human necessity. The average American household became the financial asset.

This is not a moral argument — it’s an economic one. Working-class Americans today are not poor because they don’t work. They’re poor because their wages and spending power are quietly siphoned through financial pipes built to transform liquidity shortages into multi-decade revenue streams. Their income is not spent once; it is spent again in rentier form. Every dollar that services long-term credit card interest is a dollar that never becomes:

• savings

• equity

• investment

• children

• education

• small business formation

• household stability

• or upward mobility

The credit card industry has become a liquid-taxation system for the non-wealthy, except the tax does not go to the state — it goes to private finance. And unlike government taxation, it compounds.

So yes — Trump’s 10% cap is a nudge, and arguably a smart one. It acknowledges that the extraction curve is real without yet declaring war on it. But if the United States actually wants to unleash the productive capacity of its working class — something politicians from both parties claim to want but rarely act upon — reform must go deeper. It must end the concept of lifelong revolving debt, and it must position credit as a bridge once again, not as a financial sentence.

The reform framework is simple: a lender deserves to be repaid principal plus a fair return on risk. A lender does not deserve 25 years of interest on a 5-year risk window. Any system that produces that outcome is not capitalism — it is extraction theater masquerading as credit.

In a later report, we will outline what statutory reform could look like. For now, it is enough to say that the American working class will never build wealth if it spends its entire life renting yesterday’s consumption. The Trump 10% cap is not the solution, but it forces the country to look at the machine. And that is where reform always begins.