Trump’s 10% Credit-Card APR Cap Could Hit Bank Profits and Consumer Credit Access

President Trump’s proposal to cap credit-card interest rates at 10% for one year—announced via Truth Social—represents both a political gambit in an election year and a direct threat to one of the most profitable segments of the U.S. financial system. Average credit-card APRs in late 2025 stood at about 20.97%, making the proposed ceiling a drop of roughly half that margin. Terminology such as “in violation of the law” if issuers fail to comply and a start date of January 20 give the move symbolic power, though actual enforcement would require legislative action.

Banks have sounded alarm: JPMorgan CFO Jeremy Barnum warned the cap would “reduce access to credit” and force banks to “significantly change” their business model, especially affecting subprime and near-prime borrowers. Bank executives also stressed that while affordability is a pressing issue, a rate cap would accomplish the opposite effects: worsening credit availability, higher costs from alternate financial products, and potential economic slowdown stemming from weaker consumer spending.

The markets responded with swift repricing of risk: large issuers and cards networks suffered stock losses—Capital One down ~6.4%, American Express ~4.3%, Visa/Mastercard also under pressure—with analysts projecting “billions in profits” to be erased should the cap be enacted. However, many see the risk as a policy overhang rather than a guaranteed outcome: the proposal’s legislative prospects are dim in the current Congress, and lack of implementation details (regulatory agency authority, workaround via fees or underwriting) means much is unresolved.

Strategic implications for different players diverge. Fintechs and personal-loan providers like SoFi see opportunity if credit-card issuance declines, but even they face risks relating to underwriting discipline and regulatory backlash. For banks, exposure to subprime portfolios will likely become a drag, prompting product redesigns, increased use of fees (where allowed), and a tightening of credit criteria. Card networks could lose revenue via both rate caps and proposed “swipe fee” reforms (e.g. the Credit Card Competition Act).

Open questions remain: will Congress even act? What is the constitutional/regulatory authority to impose the cap? How will banks adjust metrics like underwriting, fees, and risk weights? What are the macroeconomic consequences of reduced consumer credit in a economy where spending counts for ~70% of GDP? And what precedents or state-level experiences should inform this? Answering these will shape whether this is a short-term policy noise or a lasting turn in financial regulation.