Some of the biggest banks in the world are preparing for battle in the US, all thanks to a social media post from Donald Trump calling for a 10 per cent cap on credit card interest rates.

Trump spooked investors in big US banks last week after he vowed he’d no longer let Americans be “ripped off” by credit card interest rates of 20 to 30 per cent.

But the most interesting thing about this fight is not really Trump’s proposal (which may be hard to enforce), nor the worried response from banks, both of which are predictable enough. More surprising is that this is an idea that crosses the notoriously divided US political spectrum.

President Donald Trump said he’d no longer allow Americans to be “ripped off” on their credit card, spooking investors in US banks.Credit: AP

Indeed, Trump is the latest politician to venture into this space: progressive US politicians including Democrat Elizabeth Warren and independent Bernie Sanders have also backed capping credit card interest rates.

The fact Trump and some of his political foes support such blunt intervention is partly a sign of rising populism, but it also reflects the fact credit card interest rates are very high – often close to 20 per cent. That’s not only the case in the US, it’s equally true in Australia, where Canstar says the average rate on a balance accruing interest is 18.5 per cent.

There are also specific features of credit cards that can get people into debt traps – such as the ability to pay off only a tiny amount each month, and to rack up large amounts of interest at a very high rate.

In short, plenty of people struggle with credit card debt, and it certainly doesn’t help that the interest rates are sky-high.

Why are credit card interest rates so high?

And given credit cards can get people into difficulty,........

© The Sydney Morning Herald