Last week, President Donald Trump called for a one-year cap on credit card interest rates at 10%, arguing that current APRs amount to “rip-off” rates for American consumers. The proposal, announced on his Truth Social platform rather than through legislation, immediately catapulted credit card affordability into the headlines.
The president’s framing of credit card pricing as a consumer harm means that financial institutions must consider the regulatory and reputational risks regardless of what, if anything, Congress does next.
What Trump Can and Can’t Do Alone
A nationwide interest-rate ceiling for credit cards would require new legislation or a change in law. Existing interest rate caps at federal credit unions and for servicemembers have been approved by Congress, but past efforts to cap overall rates have stalled. To empower an agency to enforce such a cap, congressional backing would be required. Without clear statutory authority, the executive branch is limited in enforcement options.
President Trump’s announcement, though, signals priorities and puts pressure on credit card issuers. As president, he can use his platform to highlight consumer pain points and push for industry action or regulatory attention. Additionally, he can encourage agencies like the Consumer Financial Protection Bureau (CFPB) to issue guidance on credit card practices, though they cannot impose nationwide interest caps without legal authority.
What Banks Need to Watch
Financial institutions are already sounding alarms. Industry groups such as the American Bankers Association (ABA) have pushed back, arguing that a hard cap could reduce credit availability and drive some consumers to less regulated, higher-cost lenders.
Banks should monitor for legislative activity from members of Congress, regulatory guidance from the CFPB and the Fed, consumer pressures, as well as public relations risks. Credit card affordability is likely to be a hot topic going into the midterm elections, with interest rates at historic highs and revolving balances continuing to climb.
Just as Trump’s proposal primarily serves (at least, for now) as a messaging exercise, credit card issuers also need to consider the message they send when joining public backlash against a policy that could, theoretically, save their customers money.
Now is the time to pressure-test credit card pricing narratives through a consumer lens, align legal, compliance and communications teams on how affordability is explained, and prepare for sharper questions from policymakers that frame pricing as a consumer protection issue.
Whether Trump’s announcement ever results in a policy change remains to be seen but for now the standard it implies – that the industry needs to justify how it is pricing consumer credit – is already reshaping the landscape.
By Rachel Racoosin, EVP, Edelman Smithfield & Natalie Short, SVP, Edelman Smithfield