Why a proposed 10% cap on credit card interest is rattling big banks | Fortune

"Trump called for a one-year cap on credit card interest rates at 10% starting Jan. 20, reviving a pledge from his 2024 campaign as the administration seeks to demonstrate progress on affordability.Supporters argue a temporary cap could ease pressure on households facing average APRs above 20%.But economists and bank executives warn that the move requires approval from Congress and that the policy could have unintended consequences by making banks more reluctant to offer credit, thus slowing down consumer spending."

"The proposal was a major topic this week during the earnings calls of America's big banks. Executives broadly agree a 10% cap would reduce access to credit for higher-risk borrowers and could have adverse effects on consumer spending and growth, Morningstar director Sean Dunlop told me. "I think Jane Fraser, CEO of Citigroup, provided the most context among the firms I cover, alluding to a previous time when President Carter tried to impose interest rate ceilings-and the administration had to abandon its efforts within two months, given the severity of the economic impact," Dunlop said."

"Fraser noted that consumers spend roughly $6 trillion annually on credit cards and carry about $1.2 trillion in balances. She warned that making card products unprofitable would curtail spending on those cards as credit availability declines, he said. Other CEOs and CFOs had similar concerns: - JPMorgan Chase CFO Jeremy Barnum said the cap would likely reduce access to credit rather than help consumers. He argued that intense competi"

President Donald Trump proposed a one-year cap on credit card interest rates at 10% starting Jan. 20. Supporters say a temporary cap could ease pressure on households facing average APRs above 20%. Economists and bank executives warn the move requires congressional approval and could make banks more reluctant to extend credit, slowing consumer spending. Bank leaders say a 10% cap would reduce access for higher-risk borrowers and could hurt consumer spending and growth. Consumers spend roughly $6 trillion annually on credit cards and carry about $1.2 trillion in balances, creating concerns about card profitability and availability.

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