Donald Trump floated imposing a temporary 10% cap on credit card interest rates, an idea that exceeds a proposal once put forth by progressive Sen. Bernie Sanders.
It has also been likened to Kamala Harris' plan to lower prices that the former president slammed as "communist-inspired" price controls.
"While working Americans catch up, we're going to put a temporary cap on credit-card interest rates," Trump said at the campaign event Wednesday evening at the Nassau Coliseum on Long Island. "We can't let them make 25 and 30 percent."
The average interest rate on credit cards was 21.5% in May - near the highest levels in about 10 years, the Wall Street Journal reported, citing data from the Federal Reserve. The report said credit card interest rates haven't fallen below 10% since 1994.
Similar proposals have been pushed unsuccessfully by Sanders, the independent senator from Vermont, who proposed a 15% cap, and Republican Sen. Josh Hawley of Missouri who suggested an 18% ceiling last year with the Capping Credit Card Interest Rate Act.
The Cato Institute, a libertarian think tank, said Trump's embracing "such restrictive policies" is a "surprise" because he criticized Harris' recipe for cutting inflation.
It pointed out that Trump even blasted Harris' proposal at the New York rally, saying that her "only idea for solving inflation is to impose communist inspired price controls which have never worked."
"When policymakers decide that the market rate is too high and impose an interest rate cap, they leave businesses with two options: reduce the quantity or the quality. In other words, consumers will either face a shortage or receive lesser products. Either way, consumers lose," the Cato Institute wrote.
While lower- and middle-income families with credit card balances would see benefits from Trump's plan, they would also be the first ones the banks cut off if the cap becomes law, David Robertson, a publisher of the Nilson Report, which monitors the credit card industry, told the Wall Street Journal.
"Wall Street banks would say, how much further risk do I want to bring on given the fact that my revenue is shrinking?" he said. "That's where the rubber meets the road."
The Wall Street Journal also reported that banks would likely implement other fees to make up the difference in lost revenue, meaning placing annual fees on credit cards that previously didn't have them or raising fees on cards that did.
The Trump plan "would result in the loss of credit for the very consumers who need it the most," the American Bankers Association said, adding that those consumers would be forced into riskier options like payday lenders.
