Bank lobby slams Trump's 'devastating' threat to credit card interest

• Key insights: Trump has proposed a 10% cap on credit card interest rates. 
• What's at stake: The move follows other attempts to regulate credit card fees. 
• Forward look: Congress would likely have to approve such a move. 

President Donald Trump's plan to cap credit card interest rates at 10% was met by angry words from bank lobbyists and market declines for issuers.

Stocks for credit card issuers and the major card networks fell Monday morning, with Citi, JPMorganChase and Bank of America all falling more than one percent. Credit card companies were also lower, with Capital One, Synchrony Financial and American Express all falling more than 5%. Visa and Mastercard slid more than 2%. These firms did not provide comments by deadline. Buy now/pay later lender Affirm, whose stock was up 4%, did not comment.

In a social media post, SoFi CEO Antony Noto said "If this is enacted — and that's a big if, though part of me hopes it is — we would likely see a significant contraction in industry credit card lending. Credit card issuers simply won't be able to sustain profitability at a 10% rate cap. Consumers, however, will still need access to credit. That creates a large void — one that SoFi personal loans are well positioned to fill." Noto contends SoFi's personal loans have rates between 9% and 13%.

Trump vs. bank advocates

The Trump administration first announced its plan to cap interest rates on Friday: "Effective January 20, 2026, I, as President of the United States, am calling for a one-year cap on Credit Card Interest Rates of 10%," according to Trump's social media announcement. "Please be informed that we will no longer let the American Public be 'ripped off' by Credit Card Companies that are charging Interest Rates of 20 to 30%, and even more, which festered unimpeded during the Sleepy Joe Biden Administration. AFFORDABILITY!" Bank trade groups criticized Trump's announcement. 

"We share the president's goal of helping Americans access more affordable credit. 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 businesses who rely on and value their credit cards, the very consumers this proposal intends to help," a group of bank trade groups including the American Bankers Association, the Financial Services Forum, the Consumer Bankers Association and the Independent Community Bankers Association, said in a statement.  

"If enacted, this cap would only drive consumers toward less regulated, more costly alternatives. We look forward to working with the administration to ensure Americans have access to the credit they need."

In a report issued Monday afternoon, the Electronic Payments Association said 82% to 88% of open credit card accounts would effectively lose access to credit under a 10% APR cap; and nearly every credit card account associated with a credit score below 740 would be closed or severely restricted.

Additionally, the EPA says 175-190 million American cardholders would effectively lose access to credit cards nationwide; and all remaining cardholders — regardless of credit score — would face lower credit limits, tighter underwriting standards, and reduced or eliminated rewards; and consumers shut out of credit cards would likely turn to higher-risk alternatives exempt from the cap, including payday lenders, unregulated online lenders, title lenders, and pawn shops.

"A one-size-fits-all government price cap may sound appealing, but it wouldn't help Americans — it would do the exact opposite, harming families, limiting opportunity, and weakening our economy," said EPA Executive Chairman Richard Hunt in a release. "History is clear that government price controls don't make costs disappear, they simply reduce access, push consumers out of safe, regulated credit, and leave the very people they claim to help with fewer options when they need them most."

Can Trump dictate rates?

There have been bipartisan efforts to cap credit card interest rates. Senators Bernie Sanders (I-Vt.) and Josh Hawley (R-Missouri) in 2024 introduced legislation to limit credit card rates at 10%. And Trump proposed a 10% cap during the 2024 campaign. The president does not have the authority to control interest rates, so any cap would require a vote from Congress, which would need to happen in the next eight days to meet Trump's Jan. 20 timeline. 

"The U.S. credit card market works extraordinarily well for Americans across the socio-economic spectrum. President Trump has no statutory authority to impose a national price cap on credit card interest rates by presidential fiat. None," Eric Grover, principal at Intrepid Ventures, told American Banker. "While slashing permissible credit card interest rates has full-throated support among progressives like Elizabeth Warren and Bernie Sanders and populist notional conservatives like Josh Hawley and Anna Luna, Congress is not likely to pass legislation capping them."

In all the industry responses to the president's proposed cap from industry associations, not one has suggested that he cannot do it, according to Aaron McPherson, principal at AFM Consulting. "To the contrary, they rely on the same arguments against it that they used when Senators Hawley and Sanders proposed such a cap last year," McPherson said, adding the courts have been deferential to presidential authority this term, so an executive order may not be struck down. 

"In the meantime, credit card issuers would have to comply, unless they can get a court injunction. No one thought that the president could unilaterally raise tariffs the way he has, but here we are. So, in short, I think we need to assume this will happen, and expect higher annual fees to result."