U.S. banks and financial institutions are pushing back against President Donald Trump’s proposal to cap credit card interest rates. The industry cites new data suggesting the cap would severely restrict credit access for millions of households and small businesses. Trump, facing pressure over the rising cost of living, called for a one-year cap of 10% on credit card interest rates beginning January 20. The Electronic Payments Coalition, representing financial institutions and payment card networks, swiftly rebutted the proposal. The EPC stated that nearly all credit card accounts associated with credit scores below 740—representing 82% to 88% of open accounts—would face closure or severe restrictions under a 10% cap.
Richard Hunt, Executive Chairman of the EPC, stated that the cap would harm families, limit opportunities, and weaken the economy. Lenders argue that while subprime borrowers would be hardest hit, most borrowers would face higher annual fees, reduced rewards, and increased monthly account charges. Some warned the cap would slow consumer spending. Credit cards are a cornerstone of U.S. consumer finance, providing flexible credit access but often at high rates. These rates and associated fees are a major profit source for banks and card issuers.
According to data from the Consumer Financial Protection Bureau, average APRs in 2024 reached their highest levels since 2015, with most of the increase attributed to the rising prime rate. General-purpose cards averaged 25.2%, while private-label cards reached 31.3%. The share of cardholders making only the minimum payment was also at its highest level since 2015. Industry sources suggest the cap would likely prompt a severe pullback in lending, rendering credit cards unprofitable.
Morningstar analyst Michael Miller wrote that while a cap is unlikely, it would have dire consequences for credit card profitability if enacted. However, a study from Vanderbilt Policy Accelerator found that a 10% cap would save Americans $100 billion annually, though it would also reduce credit card rewards for some borrowers. Brian Shearer of Vanderbilt Policy Accelerator argues that banks have substantial profit margins and could absorb the cap.
