U.S. banks and financial institutions have warned that President Donald Trump’s proposal to cap credit card interest rates could sharply reduce access to credit for millions of Americans, particularly lower-income households and small businesses. Industry groups say new analysis shows a 10% ceiling on interest rates would force lenders to close or restrict a large share of existing credit card accounts.
Trump last week called for a one-year cap on credit card interest rates, beginning January 20, as part of a broader effort to ease pressure on households struggling with high living costs. The proposal, however, has raised questions about feasibility, as the president has not outlined how such a cap would be implemented. Banking analysts note that legislation from Congress would likely be required.
Financial groups moved quickly to challenge the plan. The Electronic Payments Coalition, which represents banks and payment networks, said the vast majority of credit card accounts held by borrowers with credit scores below 740 could become unviable under a 10% rate limit. According to the group, lenders would be unable to price risk appropriately, leading to widespread account closures or tighter credit limits.
Banks also argue that even consumers who retain access to credit would likely face higher annual fees, reduced rewards, and new monthly charges as lenders attempt to offset lost interest income. Some warned that a sharp contraction in credit availability could slow consumer spending and weigh on economic growth, given the central role credit cards play in everyday household finances.
Data from the Consumer Financial Protection Bureau shows that average credit card interest rates reached multi-year highs in 2024, driven in part by rising benchmark rates. At the same time, a growing share of cardholders have been making only minimum payments, highlighting increased financial strain among consumers. Industry analysts say these trends make it difficult for lenders to operate profitably under a strict rate cap.
Supporters of the proposal, however, dispute the banks’ warnings. Research from academic institutions suggests a 10% cap could save consumers tens of billions of dollars annually, even if some card benefits are reduced. Advocates argue that credit card profits remain robust and that lenders have room to absorb lower interest rates without cutting off borrowers, framing the debate as a question of consumer protection versus industry margins.