Bankers' response is tepid bordering on frigid
President Donald Trump is calling on credit-card issuers to cap interest rates at 10% for one year, targeting one of banks most profitable business lines.
The proposal has drawn rare bipartisan interest from lawmakers but stiff warnings from the banking industry about reduced access to credit.
It remains unclear how the administration could compel lenders to slash rates quickly without new legislation.
After a week of market-rattling announcements aimed at lowering housing costs, President Donald Trump turned his attention to another financial pressure point for consumers: credit-card interest rates.
In a social media post, Trump demanded that credit-card lenders cap interest rates at 10% by Jan. 20, placing major issuers including JPMorgan Chase & Co., Capital One Financial Corp. and Citigroup Inc. squarely in his sights.
Credit-card rates, which have hovered above 20% in recent years, have become an increasingly visible target for lawmakers on both sides of the aisle as Americans struggle with high borrowing costs amid persistent inflation.
Industry strikes a cautious but firm response
Banking trade groups responded with a more measured tone than in past fights over rate caps, even as they warned of serious consequences.
We share the presidents goal of helping Americans access more affordable credit, the Bank Policy Institute and the Consumer Bankers Association said in a joint statement late Friday. At the same time, evidence shows that a 10% interest rate cap would reduce credit availability and be devastating for millions of American families and small business owners who rely on and value their credit cards.
The industry has long argued that sharply lower rates would force banks to tighten lending standards, leaving higher-risk borrowers with fewer options beyond payday lenders or pawn shops.
High rates carry real costs for consumers
For consumers who rely on credit cards to manage unexpected expenses, the cost of carrying a balance can be steep. The average credit-card interest rate stood at about 21% at the end of last year, according to the Federal Reserve.
At that rate, carrying a $10,000 balance for three years generates more than $3,500 in interest. By contrast, the average rate on a 30-year fixed mortgage another common consumer loan sits just above 6%, according to Freddie Mac.
Banks argue the difference reflects risk. Credit-card debt is unsecured, meaning lenders have no collateral to recover when borrowers default.
Card lending has become a major profit engine
While losses were severe during the financial crisis with credit-card charge-off rates exceeding 10% card lending has since become one of the most lucrative areas of consumer banking.
JPMorgan reported a net yield of 9.73% on more than $200 billion in credit-card loans in 2024, driving the bulk of the $25.5 billion in revenue for its card services and auto unit. The bank also recorded roughly $7 billion in credit-card charge-offs.
That profitability has made the business a frequent target for politicians seeking to rein in consumer costs.
Path to enforcement remains unclear
After legislative efforts to cap rates stalled last year, it is unclear how Trump could compel lenders to slash rates within days, beyond using the presidencys bully pulpit.
If a 10% cap were imposed, the effects would vary widely across borrowers and lenders. Riskier consumers would likely face canceled or reduced credit lines, higher minimum payments or new fees, according to a Bank Policy Institute analysis.
Using Federal Reserve data from 2019, the group estimated that a 10% cap would have reduced credit availability for roughly 14.3 million people and families.
Smaller and subprime-focused lenders could feel the brunt
Lenders focused on lower-income or higher-risk borrowers would likely be hit hardest, according to Bloomberg Intelligence analyst Himanshu Bakshi. Those include Capital One, store-card specialist Synchrony Financial, and Bread Financial.
Credit unions have also warned of severe impacts. Scott Simpson, president of Americas Credit Unions, said a 10% cap would make credit-card lending untenable for most institutions.
Institutions will not be able to offer credit cards to most consumers at a 10% rate, Simpson said.
Posted: 2026-01-12 04:04:08
