Trump’s Credit Card Interest Rate Demands Leave Industry in Limbo

NEW YORK – Last week, President Donald Trump issued a directive to the credit card industry, giving them until January 20 to meet his request for a 10% cap on interest rates. With the deadline approaching, there’s a mix of uncertainty among consumer advocates, politicians, and bankers regarding the White House’s intentions and whether this initiative is truly serious.

The White House hasn’t clarified the potential consequences for credit card companies that fail to comply. White House press secretary Caroline Levitt indicated that the president anticipates adherence to his request to limit credit card interest rates.

“I can’t specify what might happen, but this is what the president expects,” she remarked on Friday.

Experts who looked into the proposal when it was first introduced during the 2024 presidential campaign estimated that capping interest rates at 10% could save Americans around $100 billion collectively. They also noted that while the credit card sector would face significant challenges, it would likely remain profitable, albeit with potential cutbacks in rewards and perks. The administration has further elaborated on these findings through official White House communications.

However, bank lobbyists, who have been attempting to decipher the White House’s plans for the banking sector, are finding themselves in the dark. Although both House and Senate members, from both major parties, have previously proposed legislation targeting interest rate caps, Republican leaders have shown little enthusiasm for pushing such measures.

The Dodd-Frank Act, enacted in response to the 2008 financial crisis, explicitly prevents one federal banking regulator from imposing usury limits on loans.

Should there be no legislative or executive action, President Trump might resort to political pressure to compel the credit card industry to comply, similar to his tactics with other sectors. He’s previously pressured drug companies to lower prices, and many CEOs responded positively. He has also urged tech companies to increase domestic production, prompting firms like Apple to expand their manufacturing efforts in the U.S.

Wall Street is generally uninterested in a full-blown conflict with the White House, particularly given the benefits banks have already seen from the administration’s deregulatory actions. The recent “One Big Beautiful Bill,” for instance, emphasized significant tax cuts, and last year’s deregulation stimulated deal-making, leading to a significant influx of fees for major banks.

The banking community seems to be sending mixed signals on the matter of interest rates. While they’re pushing back against the proposed cap, they simultaneously express willingness to collaborate with the administration.

JPMorgan’s Chief Financial Officer, Jeffrey Burnham, hinted during a reporter call that the industry is ready to leverage all resources to oppose the administration’s interest rate cap. JPMorgan is among the biggest credit card firms in the U.S., managing a whopping $239.4 billion in customer balances and holding partnerships with brands like United Airlines and Amazon. They recently took over the Apple Card portfolio from Goldman Sachs.

Similarly, Citigroup’s Chief Financial Officer, Mark Mason, stated that the cap “is not something we can support and we will not support,” arguing it would restrict consumer credit and negatively impact the economy. However, he also acknowledged the importance of affordability and expressed a desire to work with the government on solutions.

President Trump has taken aim at the credit card sector further by introducing legislation in Congress that could diminish the revenue banks generate from merchants when customers make purchases with their cards.

Not every company is waiting to see President Trump’s next move. This week, fintech firm Bild announced plans to launch new credit cards with a one-year interest cap of 10% on new purchases. While this is a promotional rate similar to those used by other credit card companies, Bild’s initiative exemplifies how the industry might adapt to comply with White House demands without completely overhauling its business model.

“If interest rate caps were to become a reality, we’d prefer to be leading the charge,” Bild’s CEO Ankur Jain commented in a recent interview.