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[USA HERALD] President Trump's recent announcement on Truth Social calling for a one-year cap on credit card interest rates at 10%, effective January 20, 2026, is providing powerful new ammunition for California consumers defending against debt collection lawsuits. By directly criticizing credit card companies for imposing 20-30% and higher rates that he described as a longstanding "rip-off" of American families, the President has spotlighted what many borrowers already experience as exploitative terms. This revives a pledge from his 2024 campaign and arrives at a moment when borrowers facing lawsuits may use it to challenge excessive interest in court.

Three Key Takeaways

1. Public Policy Boost: Trump's declaration creates persuasive evidence of national consensus against predatory rates, strengthening arguments that high APRs "shock the conscience" under California's unconscionability doctrine.
2. Settlement Pressure: Creditors facing scrutiny and potential stock impacts may be more willing to negotiate, waive excessive interest, or settle lawsuits to avoid drawn-out battles.
3. Temporary but Timely Leverage: While not yet law, the proposal—paired with pending federal bills like S.381—supports claims for reduced interest, restitution, or debt offsets in ongoing California cases.

How Trump's Proposal Strengthens Counterclaims

In California debt collection lawsuits, borrowers sued by credit card issuers or debt buyers can file counterclaims or cross-complaints seeking relief from unconscionable interest under Civil Code § 1670.5 and the Unfair Competition Law (Bus. & Prof. Code § 17200). The California Supreme Court's 2018 decision in De La Torre v. CashCall established that even loans exempt from strict usury limits can be deemed unconscionable when rates are excessively one-sided, lack reasonable justification, and shock the conscience under the totality of circumstances.

Trump's Truth Social statement labeling rates above 10% as exploitative and harmful directly supports the argument that 20-30%+ interest violates fundamental fairness principles. Borrowers are likely to cite the President's words as evidence of evolving public policy consensus, aligning the high rates with California's constitutional usury cap of 10% for non-exempt loans (Article XV) and demonstrating that enforcing such interest in court would contravene broader notions of equity.

The pending 10 Percent Credit Card Interest Rate Cap Act (S.381), introduced in early 2025 and still under consideration in the Senate Banking Committee, further reinforces this momentum by proposing a temporary 10% cap and a private right for debtors to challenge and recover excessive interest and fees.