On January 9, 2026, President Donald Trump proposed a one-year capping of credit card interest rates at 10%.[1] This came after the President, joined by U.S. Senators Bernie Sanders (I-VT), Jeff Merkley (D-OR), Josh Hawley (R-MO), and Kristen Gillibrand (D-NY) acknowledged a serious economic and social issue plaguing American households: usurious credit lending practices.[2]

The scope and reach of credit card usage in the United States cannot be overstated. In 2022, credit card spending totaled $5.83 trillion – about “22.4 percent, or one-fifth” of the country’s $26 trillion Gross Domestic Product (GDP).[3] Roughly 78% of U.S. adult residents have credit card accounts,[4] averaging roughly $6,523 per individual cardholder with a total of $1.23 trillion in credit card balances.[5] As of 2024, the average annual percentage rate (APR) on credit cards reached 25.32%.[6] That makes the average monthly payment roughly $138.[7] That same year, over $160 billion in credit card interest was charged with roughly $31.3 billion in fees.[8]

Today, credit card interest rates serve as breeding grounds for usury. Thus, the efforts of the Trump Administration and Congress to introduce a federal usury law for credit cards comes is timely and represents a step in the right direction for ethical and just modern lending practices.

THREE TRADITIONAL APPROACHES TO USURY

It is important to define usury before understanding how to how to prevent it through legislation. Mariam-Webster dictionary defines usury as “the lending of money with an interest charge for its use” or “an unconscionable or exorbitant rate or amount of interest.”[9] Similarly, the legal definition of usury is defined as the interest rate on a loan that would be exorbitant as a matter of law.[10] For example, a maximum interest rate of 10% serves as the standard rate which anything above is considered exorbitant and usurious. However, three traditional approaches to defining usury as presented by St. Thomas Aquinas, contemporary Thomists, and Hilaire Belloc serve to clarify what is “unconscionable or exorbitant” under the modern definition.[11]

Aristotle defined usury as making a “gain out of money itself, and not of the natural object of it,” which is to use in exchange.[12] He further defined interest as “the birth of money from money,” which he viewed as unnatural because the offspring (money received from interest) resembles the parent (the principal).[13] Similarly, while Aquinas found investments in capital to be acceptable and non-usurious,[14] he believed money was consumed upon exchange and that charging certain interest was tantamount to selling something nonexistent. This ultimately creates an inequality between the lender and borrower.[15] Thus, according to Aquinas, charging interest becomes usury when the borrower must pay more in return than what he received. Such a transaction violates the fundamental commutative justice principles that govern interactions between persons.[16]

Importantly, Aquinas did not see interest as inherently wrong; rather, he found the disordered use of interest (usury) wrong. Aquinas identified some circumstances that may arise during transactions that prove relevant to today’s credit markets. Firstly, Aquinas recognized the just charge of interest on loans where the lender incurs an actual loss resulting from the transaction.[17] For example, the Fifth Lateran Council (1512-17 A.D.) of the Catholic Church allowed for a creditor to charge interest to exclusively cover expenses of those employed by the lender and other operational expenses.[18] The Council also accepted risk as a just reason to charge interest.[19]

Secondly, Aquinas rejected the charging of interest to cover the lender’s opportunity cost, or the predicted loss of profit caused by lending rather than using the lent money for more profitable ventures.[20] Aquinas’s rejection stems from the notion that future profits are never guaranteed.[21] For example, if the lender must choose between lending and breaking even by charging interest to only cover expenses or investing in a company that might yield a return, the difference between the loan and the investment’s yield may not be recovered via interest under Aquinas’s view.

Finally, Aquinas found investing to be legitimate because, instead of lending and passing ownership and risk to the borrower, the investor retains both the risk and ownership of the money used to produce the profit.[22] However, Aquinas did not differentiate between debt and equity financing, but seemingly assumed that debt used as a vehicle for profit is equivalent to investing.[23] Therefore, Aquinas saw debt for purposes of profit as equivalent to a partnership arising from investment.[24] When investing, the investor may wish to be compensated with part of the profits arising from the use of the invested funds without such compensation being usurious.[25] Simply put, Aquinas accepted lending as investment to be non-usurious. He also permitted charging interest where it was used to cover a lender’s actual loss but rejected charging interest to compensate for possible loss of profit. Later developments in the definition of usury build upon these foundational principles outlined by Aquinas.

Contemporary Thomists understood Aquinas’s perspective on usury within the context of Aquinas’s theory of recovery from a loss of profit resulting from the depriving or damaging act of another.[26] The same logic extends to forfeiting an alternative for the lent money that the lender would have profited from.[27] In addition to allowing interest for the recovery of actual loss (including risk), Saint Alphonsus Liguori[28] stated that charging interest to recuperate lost profits requires three conditions: (1) that the loan was the true cause of the loss of profit or that the profit was forgone because the lender loaned and not because of some other reason, (2) that interest not be charged beyond what the loss of profit was able to be valued as, and (3) that the borrower’s charge for the loss of profit did not happen at the time of the loan’s issuance, but later.[29] The “mere possibility of making a profit” is not enough to justify charging interest to cover loss of profit; rather, there must be “only a virtual intention to profit justly.”[30] Such a view is broad in its allowance. A lender could charge interest, for example, if he has a probability of investing that can be valued at a just price[31] or even by having the ability to decide whether to invest (which can be valued itself) is legitimate.[32] Thus, the contemporary Thomist view results in usury only where a party lends simply to charge the borrower interest for a profit when the lender would not have otherwise intended to invest in some other profitable venture, i.e., where the lender would have otherwise let his money sit without any intention to invest it for a profit.

A simpler train of thought stems from Hilaire Belloc’s[33] discussion of productive and unproductive loans.[34] Belloc defines usury as “a claiming of interest upon an unproductive loan, or of interest greater than the real increment produced by a productive loan.”[35] These loans are  distinguished because a productive loan yields a return, while an unproductive loan does not.[36] Thus, the productive loan acts equivalent to an investment.[37] Under Belloc’s view, one cannot justly charge interest on an unproductive loan, while one can justly charge interest proportionally to the profit yielded by the loan.[38] Notably, the distinction between productive and unproductive loans is results-based, not consumption based. Therefore, an unproductive loan could have had the purpose of being used for production but no profit was derived therefrom.[39] For example, if a lender loans money to a businessman to buy a machine to produce widgets for a profit but the machine fails to do so for whatever reason, the lender cannot charge interest based on the profits of the machine in circumstances where there were none. To charge interest in this example would be to impoverish the failed businessman.[40]

USURY AS APPLIED TO THE PROPOSED 10% CAP ON CREDIT CARD INTEREST RATES

It is currently unknown whether Trump’s proposal puts a cap on the annual percentage rate (APR),[41] any specific component of APR, or on credit margins,[42] but the Congressmen’s proposed joint bill indeed specifies a cap on APR.[43] Assuming that Trump’s proposal would also cap APR, both proposals insufficiently accommodate Aquinas’s view on usury.

Under Aquinas’s view, interest charged for the actualized cost resulting from the loan is just.[44] Because the proposals would target APR and included in APR are the fees and interest charged, a simple percentage cap may prevent a creditor from recovering on any actual losses arising from the loan. For example, if a creditor determined that it will only charge a total of fees and interest to match the costs of issuing the loan such as labor, institutional or overhead costs, and other legitimate actual costs, and the sum of those costs result in an APR above the 10% cap, the creditor would only be able to charge up to the 10% cap. Unless the creditor can minimize its cost structure enough to maintain an APR under the 10% cap, no creditor could extend credit. Further costs associated with the risk assessment of a given creditor are also limited. Inhibiting creditor charges to cover cost could potentially limit credit to borrowers with higher credit scores, possibly eliminating credit availability for those with “imperfect credit histories, who would generally be those most in need” of credit.[45]

Additionally, the proposals do not differentiate between personal and business credit cards.[46] A significant portion of small businesses use both personal and business credit cards for business-related purchases.[47] A cap on APR would limit a creditor’s ability to be compensated for part of the estimated profits earned by businessmen. Lastly, because APR would be limited, any interest charged for the sake of loss of profit would be implicitly limited, partially satisfying Aquinas’s prohibition on charging interest for loss of profit. However, because the limit is on APR broadly and does not, for example, specify that interest may only be charged to recuperate actualized costs or parts of profits estimated from the borrower’s use of the loan, the proposed limit is likely insufficient to limit usury.

Under the contemporary Thomist approach, the proposed APR cap is likely insufficient because it does not directly address the charging of interest based on loss of profit. Similar to the failure under the Aquinas approach for limiting the creditor’s ability to charge interest to cover costs, the cap would limit the charge of interest for actualized loss under the contemporary Thomist approach. Furthermore, the APR cap does not allow a creditor to account for loss of profit via interest. By limiting a creditor’s ability to offset actualized loss and opportunity cost from not investing in other profitable capital ventures, like under Aquinas’s approach, the cap would severely limit the creditor’s incentive to provide lines of credit.[48] It is also unlikely that a modern financial institution would commit usury under this approach, regardless any specific proposed limitation, because the modern financial system always provides opportunity cost through its incredibly diversified and profitable investment options.[49]

Finally, under Belloc’s approach, the APR cap fails by lacking any differentiation between productive and unproductive loans. Because the cap is generally on APR, such APR applies to credit extended for personal or business purchases, so it does not discriminate between a loan resulting in a profit or loss. The proposed limit does not consider the result of the loan for the borrower but merely seeks to limit only the interest rate charged. In the case where a creditor is somehow able to still charge an APR that avoids them being forced to exit the credit market, under the limit, a creditor could still charge interest on a loan that yields no profit for the borrower (an unproductive loan). The effect of the limit lacking any consideration of the result of the extended credit is what occurs in the status quo, where creditors can continue to charge interest for unproductive loans, making the interest charges usurious within Belloc’s view. Here, the effects of burdensome interest on unproductive loans are overwhelmingly negative. Because an unproductive loan yields no profit, charging interest to recuperate some profit makes a bad situation worse by charging interest for a proportion of non-existent profit.

The effects from financial stress and anxiety that may result from cycles of crushing debt and financial pressure lead to negative, nonfinancial effects like increased mortality.[50] That is why the Catholic Church greatly condemns the practice of usury. Pope Leo XVI, the first ever American Pope, recently denounced modern usury as “bring[ing] crisis to families . . . leading people to think of suicide”[51] and leading to “the hunger and death of [the usurer’s] brethren in the human family.”[52]

In conclusion, although the proposals to cap credit card interest rates at 10% attempt to prevent usury, they fail to adequately combat usury under the approaches presented by St. Thomas Aquinas, contemporary Thomists, or Hilaire Belloc to defining usury, while nonetheless limiting the availability of credit to those who seek it most. By their narrow natures, the proposals fail to address the key problems and injustices entangled in the complex credit market of the United States. Therefore, proposals to prohibit usury should consider these traditional concepts to better seek justice within every credit transaction, as “justice raises up nations; sin, however, makes nations miserable.”[53]

[1] Ken Sweet & Seung M. Kim, Trump pushes a 1-year, 10% cap on credit card interest rates and banks balk, THE ASSOCIATED PRESS, (Jan. 10, 2026), https://apnews.com/article/trump-credit-cards-interest-rates-savings-banks-dba221f122789427c1c625ba873c9b71.

[2] See Id.; 10 Percent Credit Card Interest Rate Cap Act, S. 381, 119th Cong. [hereinafter Rate Cap Act] (2025 – 26); The Consumer Credit Card Market, Consumer Financial Protection Bureau, 18 [hereinafter CFPB] (Dec. 2025); Hugh Rockoff, Prodigals and Projectors: An Economic History of Usury Laws in the United States from Colonial Times to 1900, NBER Working Paper Series, 16-17, 43 (May 2003) (explaining the history and development on anti-usury legislation and laws), to understand the development of anti-usury laws and the incentives behind abandoning them.

[3] James Mulholland, From the CBA Data Desk: Credit Cards Helped Fuel America’s Fastest Post-Pandemic Recovery, CONSUMERS BANKERS ASS’N (Oct. 8, 2025), https://consumerbankers.com/blog/from-the-cba-data-desk-credit-cards-helped-fuel-americas-fastest-post-pandemic-recovery/.

[4] CFPB, supra note 2, at 18.

[5] Robin S. Frankel, How Does Your Debt Compare? U.S. Average Credit Card Debt in 2026, FORBES (Dec. 23, 2025), https://www.forbes.com/advisor/credit-cards/average-credit-card-debt/.

[6] Evan Coleman, What Is The Average Credit Card Interest Rate This Week? November 24, 2025, FORBES (Nov. 24, 2025), https://www.forbes.com/advisor/credit-cards/average-credit-card-interest-rate/?form=MG0AV3.

[7] Taking the average credit account balance, multiplying it by the average APR and dividing by the number of months per year gives the average monthly payment, not including any other expense which may be included in a minimum payment by an issuer. CFPB, supra note 2, at 70-71.

[8] Id. at 40, 60.

[9] Usury, MERRIAM-WEBSTER, https://www.merriam-webster.com/dictionary/usury (last visited Jan. 20, 2026).

[10] Id.

[11] Id.

[12] ARTISTOTLE, POLITICS, Bk. I, Pt. X, (E. M. Edghill trans.), reprinted in 1 THE COMPLETE WORKS OF ARISTOTLE 1252a (Delphi Classics ed., 2013) [hereinafter POLITICS]

[13] Id. “Principal is the original sum of money that’s borrowed in a loan or placed into an investment.” Adam Hayes, Principal: Definition in Loans, Bonds, Investments, and Transactions, INVESTOPEDIA (Jun. 4, 2025), https://www.investopedia.com/terms/p/principal.asp.

[14] See POLITICS, supra note 20.

[15] Medieval Monday: Thomas Aquinas on Debt, from Beggar Thy Neighbor, UNIV. OF PENNSYLVANIA PRESS (Jun. 2013), https://www.pennpress.org/blog/medieval-monday-thomas-aquinas-on-debt-from-beggar-thy-neighbor/.

[16] See John Buchmann, A Time for Reconsidering the Catholic Prohibition of Usury, UNIV. OF NOTRE DAME: CHURCH LIFE J. (Jul. 2021), https://churchlifejournal.nd.edu/articles/revisiting-the-catholic-prohibition-of-usury/.

[17] ST. THOMAS AQUINAS, SUMMA THEOLOGIA, Pt. II-II, Q. 78, Art. 1. (Fathers of the Eng. Dominican Province trans., Christian Classics 1981) [hereinafter SUMMA THEOLOGICA].

[18] Fifth Lateran Council 1512 – 17 A.D., Papal Encyclicals Online, Session 10 [hereinafter Fifth Lateran Council], https://www.papalencyclicals.net/councils/ecum18.htm. The Council dealt with a scandal arising from credit organizations created to extend credit to the poor which were allegedly charging interest to cover operational expenses but were also alleged to also be profiting from interest. The Council rejected charging interest for profit, beyond mere expenses or loss.

[19] Id.

[20] Buchmann, supra note 11 (referring to opportunity cost or loss of profit as “lucrum cessans”).

[21] Id.

[22] SUMMA THEOLOGIA, supra note 26. Interestingly, Aquinas’s distinction of ownership between loaning and investing parallels concepts of residual corporate ownership where lenders who transfer ownership and risk to the borrower have priority over shareholders who maintain ownership and risk. See generally Adam Hayes, Residual Equity Theory: What it is, How it Works, INVESTOPEDIA (Jul. 20, 2022), https://www.investopedia.com/terms/r/residual-equity-theory.asp (explaining the concept of residual ownership for shareholders and its relation to a lender’s interest).

[23] See Buchmann, supra note 11.

[24] Id.

[25] Id.

[26] Matthew J. Advent, Usury and Interest, 27 J. of Markets & Morality 11 (2024), https://archives.sophronius.org/raw-books/1710-6295-1-PB.pdf.

[27] Id. at 11-12.

[28] St. Alphonsus Liguori, BRITANNICA, https://www.britannica.com/biography/Saint-Alfonso-Maria-de-Liguori (last visited Feb. 13, 2026).

[29] Id. at 12.

[30] Id.

[31] A just price depends on both the thing sold (its actual value) and the loss to the seller. SUMMA THEOLOGIA, supra note 26, at Q. 77, Art. 1.

[32] Advent, supra note 32, at 12.

[33] Hilaire Belloc, NEW WORLD ENCYCLOPEDIA, https://www.newworldencyclopedia.org/entry/Hilaire_Belloc (last visited Feb. 8, 2026).

[34] See Buchmann, supra note 16.

[35] Id. (citing Hilaire Belloc, On Usury, Essays of a Catholic (1931)).

[36] See Id.

[37] Buchmann, supra note 16.

[38] Id.

[39] Id.

[40] See Id.

[41] See What is APR and how is it calculated?, FIDELITY LEARN (Aug. 13, 2025), https://www.fidelity.com/learning-center/smart-money/what-is-apr to understand APR and how it is calculated.

[42] A margin on a credit card is calculated by subtracting the current prime rate from the card’s APR. Curtis Arnold & Jennifer Doss, Decoding Credit Card Margins: What You Need to Know, CARDRATINGS (Feb. 2025), https://www.cardratings.com/financial-literacy/decoding-credit-card-margins.html. The current prime interest rate is a rate set by the Federal Reserve that represents a reliable interest rate that would likely be charged to the most reliable borrower. Wall Street Journal Prime Rate, BANKRATE (Jan. 2026), https://www.bankrate.com/rates/interest-rates/wall-street-prime-rate/.

[43] Rate Cap Act, supra note 2.

[44] See Id.

[45] Paul Calem & Alexander Kim, The Potential Adverse Consequences of a Credit Card Interest Rate Cap, BANK POL’Y INSTIT. (May 19, 2025), https://bpi.com/the-potential-adverse-consequences-of-a-credit-card-interest-rate-cap-2/.

[46] See Rate Cap Act, supra note 2.

[47] See JPMorganChase, Cash or credit: Small business use of credit cards for cash flow management, BUS. GROWTH AND ENTREP. (May 2023), https://www.jpmorganchase.com/institute/all-topics/business-growth-and-entrepreneurship/small-business-use-of-credit-cards.

[48] See Calem & Kim, supra note 52, at 1.

[49] See generally Donald Smith, Where do Banks Invest Their Money? A Deep Dive into Financial Strategies, GUIDE FOR INV. (last visited Feb. 8, 2026), https://guideforinvestment.com/where-banks-invest-their-money/ (listing plenty of ways financial institutions invest in modern financial instruments).

[50] See Soomin Ryu & Lu Fan, The Relationship Between Financial Worries and Psychological Distress Among U.S. Adults, NAT’L CENTER FOR BIOTECHN. INFO. (Feb. 1, 2022), https://pmc.ncbi.nlm.nih.gov/articles/PMC8806009/.

[51] Address of Pope Leo XIV to Members of the National Anti-Usury Counsil, The Holy See [hereinafter Pope Leo XIV] (Oct. 18, 2025), https://www.vatican.va/content/leo-xiv/en/speeches/2025/october/documents/20251018-consulta-antiusura.html.

[52] Id. (citing Catechism of the Catholic Church, no. 2269, https://www.vatican.va/archive/ENG0015/__P7Z.HTM (last visited Jan. 20, 2026).

[53] Pope Benedict XIV, Vix Pervenit [Encyclical Letter on Usury and Other Dishonest Profits] Sec. 3.IV (1745).