As the countdown to President Trump’s ultimatum on credit card interest rates approaches, uncertainty reigns among banks, consumers, and lawmakers alike. Just a week ago, Trump issued a directive demanding that the credit card industry impose a cap of 10% on interest rates by January 20. However, with the deadline fast approaching, many are left wondering about the specifics of the White House's plans and whether Trump is truly committed to this proposal.
To date, the administration has provided scant information regarding potential repercussions for credit card companies that fail to comply with Trump’s request. In a statement from White House Press Secretary Karoline Leavitt, she noted that the president holds an "expectation" that credit card firms will adhere to his interest rate demands. "I can’t provide you with a detailed consequence at this moment, but this is certainly an expectation and indeed a demand that the president has laid out," she explained on Friday.
Research conducted on Trump’s proposal when he initially announced it during the 2024 presidential campaign suggests that capping credit card interest rates at 10% could save Americans nearly $100 billion in annual interest payments. Though such a cap would significantly impact the credit card industry, it was found that the sector could still remain profitable, albeit with a potential reduction in rewards and benefits for consumers. This research has been highlighted by the administration, featuring on official social media platforms.
In the past week, bank lobbyists have been anxiously attempting to decipher the implications of Trump’s announcement for their businesses. While various bills targeting interest rate caps have been proposed in both Congressional chambers by members from both parties, Republican leaders in the House and Senate have shown little enthusiasm for enacting such legislation.
The Dodd-Frank Act, established in response to the 2008 financial crisis to reform the financial sector, explicitly prevents at least one federal banking regulator from imposing usury limits on loans. Without legislative backing or an executive order, it seems that Trump may resort to leveraging political influence to compel the credit card sector to follow his lead, as he has successfully done with other industries. For instance, he previously pressured pharmaceutical companies to lower drug prices, resulting in some commitments from industry leaders. Similarly, he urged technology firms to shift production back to the United States, leading companies like Apple to pledge increased domestic manufacturing efforts.
Wall Street is generally disinterested in provoking a confrontation with the Trump administration, particularly as banks have benefited from the pro-business, deregulation approach taken thus far. The recent passage of the One Big Beautiful Bill has introduced another round of significant tax reductions, while existing deregulatory measures have encouraged robust dealmaking in the previous year, yielding substantial revenues and fees for major banks.
When addressing the issue of credit card interest rates, bank executives and lobbying groups have communicated a dual message: while they resist the proposed cap, they simultaneously express a willingness to collaborate with the White House. During a recent call with journalists, JPMorgan’s Chief Financial Officer Jeffrey Barnum indicated the company's readiness to vigorously oppose any rate caps the administration seeks to impose. As one of the largest credit card issuers in the nation, JPMorgan manages over $239.4 billion in outstanding balances and maintains significant partnerships with major brands like United Airlines and Amazon. They also recently acquired the credit card portfolio of Apple, further solidifying their market position.
Conversely, Mark Mason, Citigroup’s CFO, articulated strong opposition to the proposed cap, arguing that it would limit consumer access to credit and negatively affect the economy. Nonetheless, he acknowledged the pressing issue of affordability and expressed a desire to partner with the administration on mutually beneficial solutions.
In a strategic move, Trump is also backing a legislative measure that could reduce the fees banks collect from merchants whenever a customer uses a credit card, further intensifying scrutiny on the industry.
Not every company is waiting idly for Trump’s next step, however. The fintech firm Bilt has introduced a new range of credit cards, declaring that it would implement a 10% cap on interest rates for new purchases for the first year. Although this promotional offer aligns with strategies used by other credit card issuers in the past, Bilt’s initiative illustrates a potential avenue for the credit card industry to align with the White House’s expectations without fundamentally jeopardizing their business models. "If there’s going to be a cap on credit card rates, we would prefer to be at the forefront of that change," said Bilt’s CEO Ankur Jain in a recent interview.
