Trump’s 10% Interest Rate Cap Proposal Raises Questions

NEW YORK – President Trump recently informed the credit card industry that they have until January 20 to implement a 10% interest rate cap. As the deadline approaches, there’s a fair amount of uncertainty among consumer advocates, politicians, and bankers regarding the administration’s actual intentions, as well as whether Trump remains serious about the proposal.

The White House hasn’t yet clarified what consequences might await credit card companies that fail to adhere to this request. White House press secretary Caroline Levitt mentioned that the president expects compliance from the firms regarding the interest rate cap.

“I’m not going to detail specific outcomes, but this is the president’s expectation, and frankly, his request,” she stated on Friday.

Studies conducted when Trump first presented the idea in his 2024 presidential campaign suggested that Americans could save roughly $100 billion annually in interest payments if credit card rates were capped at 10%. Although the credit card sector would face challenges, it could still remain profitable; however, rewards and perks might be reduced. The administration further elaborated on these findings, sharing them through an official White House Twitter account.

Bank lobbyists, who have spent much of the past week trying to decipher the White House’s plans for the banking sector, are left in a state of confusion. While both parties have introduced legislation in the House and Senate recently, Republican leaders seem uninterested in pursuing a bill to cap interest rates.

The Dodd-Frank Act, enacted after the 2008 financial crisis, explicitly prevents certain federal banking regulators from setting limits on loan interest rates.

Without legislation or an executive order, Trump could potentially use political influence to push the credit card industry into compliance, similar to his previous actions with other sectors. For instance, he has pressured pharmaceutical companies to lower drug prices, prompting some executives in the industry to agree to his demands. Trump has also urged high-tech firms to relocate production to the U.S., resulting in companies like Apple increasing manufacturing capacity in Japan.

Meanwhile, Wall Street isn’t keen on open conflict with the White House, especially given the benefits banks have already seen from the administration’s deregulation efforts. The “One Big Beautiful Bill” signed in July advocated for further significant tax cuts, and last year’s deregulation led to a surge in mergers and investments, boosting revenue for major banks.

Reactions from bank lobbying groups have conveyed mixed messages regarding credit card interest rates. While they oppose the cap, they have also expressed a willingness to collaborate with the White House.

JPMorgan’s Chief Financial Officer, Jeffrey Burnham, indicated in a press call that the industry is ready to combat any moves to impose interest rate caps. As one of the largest credit card providers, JPMorgan’s customers hold substantial debt, and the firm has major partnerships with businesses like United Airlines and Amazon.

Citigroup’s CFO, Mark Mason, stated that they do not support a cap, arguing it could limit consumer credit and negatively impact the economy. Still, he emphasized the importance of addressing affordability in collaboration with the government.

Trump has directed further attention toward the credit card sector by backing legislation in Congress that could reduce banks’ earnings from merchant transaction fees every time customers use their cards.

Not all companies are adopting a wait-and-see approach. The fintech firm Bild revealed plans this week to launch credit cards with a one-year interest rate cap of 10% on new purchases. While this is reminiscent of promotional rates used by others in the industry, it could illustrate a way for credit card companies to align with White House expectations without disrupting their core business.

“If interest rate caps are implemented, we’d prefer to be at the forefront,” Bild’s CEO Ankur Jain shared during a recent interview.