Credit Lenders Face Pressure as Trump Proposes 10% Rate Cap
The proposal aims to curb high consumer borrowing costs but threatens to slash profitability for major credit card issuers like Capital One and American Express.
The U.S. credit services sector is facing a significant new headwind following a proposal by former President Donald Trump to impose a temporary 10% cap on all credit card interest rates.
The proposed one-year cap, which Trump stated would begin in January 2026, represents a direct threat to the primary revenue stream of consumer finance companies. The move, announced via a post on his Truth Social platform, is framed as a measure to provide financial relief to American households battling high borrowing costs.
The impact on lender profitability could be severe. The average annual percentage rate (APR) on credit card accounts accruing interest stood at nearly 23% in 2025, according to research from LendingTree. A federally mandated cap at 10% would compress net interest margins, which form the bedrock of the credit card business model. Interest income constitutes roughly three-quarters of the industry's revenue, and analysis suggests such a cap could shift the sector's return on assets into negative territory.
Major players in the space, including Capital One (NYSE: COF) and American Express (NYSE: AXP), would be directly in the line of fire. These companies, which have built extensive business models around lending to a wide spectrum of consumers, rely on interest income to offset credit risk, fund rewards programs, and generate profit. The total U.S. consumer credit card debt has swelled to over $1.2 trillion, underscoring the vast scale of the market that would be affected.
The proposal has ignited a debate over its feasibility and potential consequences. While the idea of reining in high interest rates has found some bipartisan traction—with lawmakers like Senator Josh Hawley and Representative Alexandria Ocasio-Cortez introducing similar legislative ideas—the path to implementation is unclear. As CBS News reports, a nationwide rate ceiling would likely require an act of Congress or complex maneuvering through federal regulatory agencies.
Critics of the proposal, including banking industry groups, warn of unintended consequences that could harm the very consumers the measure aims to help. The Bank Policy Institute has cautioned that rate caps could severely restrict the availability of credit. Lenders would likely be forced to tighten underwriting standards, potentially cutting off access to credit for millions of households with lower credit scores. Industry analysis suggests that to compensate for lost interest revenue, issuers would probably increase annual fees, curtail popular rewards programs, and reduce other cardholder benefits.
This creates a challenging new layer of uncertainty for the financial sector. While a Vanderbilt University study suggested a cap could save consumers billions, the potential for reduced credit access and the operational overhaul required by lenders present significant risks. For now, the credit services industry and investors are left to weigh the political viability of the proposal against its profound economic implications.