President Donald Trump’s recent directive to the credit card industry demanding a 10% cap on interest rates has resulted in widespread uncertainty among consumer advocates, politicians, and bankers. With the deadline of January 20 rapidly approaching, the specifics of the White House’s plans remain vague, and it’s unclear what repercussions credit card companies may face if they do not comply.
White House Press Secretary Karoline Leavitt emphasized that Trump expects credit card companies to adhere to this demand, although she could not clarify any specific consequences for non-compliance. “I don’t have a specific consequence to outline for you but certainly this is an expectation and frankly a demand that the president has made,” she stated.
Research has shown that imposing a 10% cap could save American consumers approximately $100 billion annually in interest payments. While the credit card industry would certainly experience significant financial strain, it is projected to remain profitable. However, industry experts caution that such cost-cutting could result in reduced rewards and other perks for consumers.
Bank lobbyists have been scrambling to understand the implications of the potential policy but remain largely in the dark about the administration’s strategy. Historically, both Republicans and Democrats in Congress have introduced bills to cap interest rates, but leadership in the House and Senate has shown little enthusiasm for such measures. Furthermore, the Dodd-Frank Act, enacted following the 2008 financial crisis, explicitly bars at least one federal bank regulator from establishing usury limits on loans.
Without legislative action or an executive order, Trump might resort to political pressure to compel compliance from credit card companies, a tactic he has employed successfully in other sectors. For instance, his pressures on pharmaceutical companies led to some commitments to reduce drug prices, while similar demands on tech companies resulted in pledges to increase domestic manufacturing.
Despite the potential for conflict, Wall Street appears reluctant to engage in a confrontational stance against the White House, particularly given the favorable regulatory environment established by the Trump administration so far. The One Big Beautiful Bill, recently signed into law, facilitated substantial tax cuts, and a deregulated landscape has encouraged significant deal-making activity within the financial sector.
Banking executives have responded to the cap proposal with a dual approach: they oppose the interest rate cap while simultaneously expressing a willingness to collaborate with the administration on affordability issues. JPMorgan’s Chief Financial Officer, Jeffrey Barnum, indicated that the company would utilize all available resources to resist the cap, while Citigroup’s Chief Financial Officer, Mark Mason, echoed similar sentiments but noted a willingness to engage in discussions about affordability.
In a strategic move, Trump has also endorsed a bill that could adversely affect banks’ earnings from merchant transactions—an action aimed at further pressuring the credit card industry.
Notably, some companies are taking proactive steps in light of the discussions surrounding interest rate caps. The fintech firm Bilt recently unveiled a new lineup of credit cards promising a 10% interest cap on new purchases for the first year. Although this promotional rate resembles strategies used by other major credit card companies, Bilt aims to position itself ahead of potential regulatory changes. Ankur Jain, Bilt’s CEO, stated, “If (a credit card rate cap) is going to happen, we’d rather be at the forefront.”
As the deadline draws near, the outcome of Trump’s interest rate cap initiative remains uncertain, leaving many stakeholders in the financial industry on edge as they await further developments.
