Trump’s Credit Card Rate Cap Proposal Puts Wall Street’s Profit Model at Risk
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Trump’s Credit Card Rate Cap Plan Sparks Clash With Wall Street
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Trump’s proposal to cap credit card interest rates at 10% aims to ease affordability concerns—but critics warn it could disrupt Wall Street profits, restrict credit, and reshape consumer spending.
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Trump credit card rate cap, credit card interest rates USA, Wall Street profits, affordability crisis US, Trump economic policy
Introduction: A Bold Affordability Promise With Big Consequences
President Donald Trump’s renewed push to cap credit card interest rates at 10% for one year has reignited a long-running debate in Washington over affordability, consumer protection, and Wall Street power.
While the proposal is framed as a direct response to Americans struggling with rising costs, it strikes at the core of how major banks and credit card companies generate profits. The idea has drawn fierce resistance from financial executives, cautious skepticism from lawmakers, and mixed reactions from economists.
As the US approaches a high-stakes midterm election season, Trump’s plan has become one of the most closely watched economic proposals of his second term.
What Is Trump Proposing?
A One-Year Cap on Credit Card Interest Rates
Trump has called for a temporary 10% cap on credit card interest rates, arguing that Americans are being crushed by excessive borrowing costs at a time when inflation and household expenses remain elevated.
Currently, the average US credit card interest rate stands at nearly 20%, according to Bankrate—roughly double the level Trump is proposing.
The president has said he wants the cap to take effect by January 20, but it remains unclear how such a policy could be implemented.
Can Trump Actually Enforce a Rate Cap?
Legal and Political Barriers
There are two possible paths to implementing a rate cap:
- Congressional legislation, which would require bipartisan support
- Voluntary participation by card issuers, which appears unlikely
So far, the White House has declined to clarify which route it would pursue. Without congressional approval or industry cooperation, the proposal may struggle to move beyond rhetoric.
Wall Street Pushes Back Hard
Banks Warn of Credit Restrictions
Executives from the nation’s largest banks have been blunt in their opposition, arguing that a rate cap would disrupt the financial system and reduce access to credit.
- Citigroup CFO Mark Mason warned that a cap would restrict credit for the consumers who need it most and harm the broader economy.
- Bank of America CEO Brian Moynihan said lower caps would mean fewer credit cards, smaller credit limits, and unintended economic consequences.
- Citigroup CEO Jane Fraser stated clearly that a rate cap is “not something we can support.”
- JPMorgan Chase CFO Jeremy Barnum said banks are evaluating all possible responses if the proposal advances.
For Wall Street, credit card interest income remains a foundational part of its business model.
Why Credit Cards Are So Profitable
The Engine of Bank Earnings
Credit card lending allows banks to:
- Charge high interest rates
- Offset risk from borrowers with lower credit scores
- Fund generous reward programs for higher-income customers
Industry analysts warn that sharply limiting interest rates could force banks to:
- Cut rewards programs
- Reduce marketing
- Tighten approval standards
- Exit certain lending segments entirely
“If you make something unprofitable, banks will simply stop doing it,” said Steve Biggar, director of financial services research at Argus Research.
Supporters Say Banks Are Overreacting
“This Is Their Cash Cow”
Advocates of reform argue that banks’ warnings are exaggerated and driven by fear of losing a major profit stream.
Brian Shearer of the Vanderbilt Policy Accelerator says a 10% rate cap could:
- Save Americans up to $100 billion annually
- Reduce excessive interest burdens
- Still leave banks profitable
While Shearer’s research suggests consumers with lower credit scores could see reduced rewards, he argues the interest savings would outweigh the losses.
According to his findings:
- Consumers with FICO scores of 760 or lower could lose $27 billion in rewards
- But they would save significantly more in interest payments
Credit Card Debt Hits Record Highs
A Growing Burden on American Households
The debate comes as US credit card debt reaches historic levels.
According to the Federal Reserve Bank of New York:
- Americans held $1.23 trillion in credit card debt in Q3 2025
- That figure represents a 5.75% year-over-year increase
- It is the highest level recorded since tracking began in 1999
Rising debt has intensified pressure on policymakers to address borrowing costs.
A Familiar Idea With Bipartisan Roots
Lawmakers Have Tried This Before
Trump’s proposal is not new. Over the years, lawmakers from across the political spectrum have backed similar ideas, including:
- Sen. Bernie Sanders
- Sen. Josh Hawley
- Rep. Alexandria Ocasio-Cortez
Each has proposed different versions of interest-rate caps, though none have successfully passed into law.
Former Republican Sen. Pat Toomey strongly criticized the idea, calling it ineffective and misleading.
“It sounds good politically,” Toomey said, “but it will result in less access to credit—period.”
Policy Critics Question Trump’s Consistency
Deregulation vs Reform
Some experts argue Trump’s proposal conflicts with his broader record of financial deregulation.
During his presidency, Trump:
- Rolled back oversight of major banks
- Reduced the authority of the Consumer Financial Protection Bureau (CFPB)
- Eliminated a Biden-era rule capping credit card late fees at $8
Aaron Klein of the Brookings Institution described the rate-cap proposal as a political gesture rather than a serious reform effort.
“He’s flailing and throwing radical ideas against the wall,” Klein said.
Former CFPB Chief Doubts Follow-Through
“The Industry Knows He’ll Back Off”
Rohit Chopra, a former CFPB director fired by Trump, said interest rate reform could be meaningful—but questioned whether Trump would pursue it aggressively.
“The credit card industry has largely gotten what it wants this past year,” Chopra said.
“They know the president will chicken out.”
What This Means for Consumers and the Economy
Potential Outcomes of a Rate Cap
If implemented, a credit card rate cap could:
- Lower interest costs for millions of Americans
- Reduce excessive debt burdens
- Shrink credit availability
- Change how banks structure rewards and lending
Economists warn that consumer spending—a key driver of US economic growth—could suffer if access to credit tightens too sharply.
Political Stakes Ahead of the Midterms
A Populist Appeal With Risks
Trump’s proposal is clearly designed to appeal to voters frustrated by affordability pressures. But it also risks alienating:
- Wall Street donors
- Moderate lawmakers
- Financial markets
Whether the plan advances or stalls could influence economic messaging heading into the midterm elections.
Conclusion: A Clash Between Populism and Profit
Trump’s push to cap credit card interest rates has put affordability front and center—but it has also exposed deep tensions between consumer relief and Wall Street’s profit engine.
For now, the proposal remains more political than practical. Still, with record credit card debt and mounting public frustration, the debate is unlikely to fade anytime soon.
How this battle plays out may shape not only Trump’s economic legacy—but the future of consumer credit in America.