economy
January 12, 2026
Trump's credit card rate cap plan has unclear path, 'devastating' risks, bank insiders say
A 10% rate cap would make large swaths of the credit card industry unprofitable, especially tied to customers with less-than-ideal credit, banks say.
TL;DR
- President Trump announced a proposed 10% cap on credit card interest rates, effective January 20th.
- The announcement led to a stock decline for major banks and credit card companies.
- Industry representatives argue that a 10% cap would make the credit card business unprofitable, particularly for subprime borrowers.
- Potential consequences include reduced credit availability, scaling back of rewards programs, and increased reliance on other forms of debt.
- A study by the Electronic Payments Coalition suggests a 10% cap could lead to the closure of nearly 90% of current credit card accounts.
- The method of enforcing this cap is unclear, with legislative action unlikely by the proposed start date.
- Analysts suggest the 10% might be an opening bid in potential negotiations between the industry and the government.
- Americans collectively hold $1.23 trillion in credit card debt as of the third quarter of last year.
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