Trump’s affordability pledge strikes directly at the heart of Wall Street’s profit engine

By John Towfighi, CNN

New York (CNN) — President Donald Trump’s proposal for a one-year 10% cap on credit card interest rates has struck a chord in debates about affordability — and set up a potential clash with Wall Street.

A rate cap could offer short-term relief, though it’s unclear if it would meaningfully address the root cause of affordability concerns.

But it could also lead card issuers to restrict credit availability and rewards, potentially hurting consumer spending and economic growth.

“An interest rate cap would restrict access to credit to those who need it the most and, frankly, would have a deleterious impact on the economy,” Mark Mason, the chief financial officer at Citigroup, said on a call with reporters on Wednesday.

But advocates for reform say a cap could save Americans tens of billions a year.

“The banks are just scrambling because this is their cash cow and suddenly people are paying attention to the fact that they are charging way too much on credit cards,” said Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator.

A long-debated proposal

The 10% rate cap proposal is the president’s latest attempt to address Americans’ concerns about affordability, as the US midterm elections approach later this year. He had touted the proposal on the campaign trail in 2024.

The current average credit card rate is 19.64%, according to Bankrate.

Lawmakers have discussed such a cap before. Populist lawmakers like Independent Sen. Bernie Sanders, GOP Sen. Josh Hawley and Democratic Rep. Alexandra Ocasio-Cortez at different times have all sponsored bills capping rates at different percentages.

It’s unclear how Trump could achieve that cap, which he said he wants to go into effect by January 20. Legislation would require Congress to act; voluntary participation would need buy-in from card issuers.

The White House did not respond to requests for comment.

“This is an old idea, and it’s a very bad idea,” former Republican Sen. Pat Toomey told CNN.

“It seems like it’s a way to be able to say, ‘Look what I’m doing about affordability. I’m making your credit cards more affordable.’ But it’s not going to work,” Toomey said. “What it’s going to result in is people having less access to credit, period.”

Wall Street demurs

Setting card interest rates is part of the bread-and-butter model for major banks and credit card companies.

“If you bring the caps down, you’re going to constrict credit, meaning less people will get credit cards and the balance available to them on those credit cards will also be restricted,” Brian Moynihan, the chief executive at Bank of America, said on his company’s earnings call on Wednesday.

“You have to balance that against what you’re trying to achieve on the affordability. We’re all in for affordability,” Moynihan said. “That cap, you will see unintended consequences of that.”

Executives at Citi and JPMorgan Chase were upfront about their opposition to a rate cap.

“A rate cap is not something that we can support,” said Jane Fraser, chair and CEO of Citigroup, on the company’s earnings call Wednesday. “And I think the reception from the Hill also seemed less than enthusiastic from what we could tell.”

Jeremy Barnum, CFO at JPMorgan Chase, said on a call with reporters Tuesday that “everything is on the table” in responding to the proposal.

Steve Biggar, director of financial services research at Argus Research, told CNN that banks could look to create offerings with lower rates to find middle ground with the administration. But ultimately, banks would reject a rate cap, he said.

“If you make something less profitable or not profitable at all, they’ll escape from the business,” Biggar said. “They just won’t underwrite that.”

Record levels of credit card debt

American households had $1.23 trillion in outstanding credit card balances in the third quarter of 2025, up 5.75% year-over-year, according to data from the Federal Reserve Bank of New York. That’s the most credit card debt on record going back to 1999.

Proponents of reform say these credit card companies’ and banks’ margins are thick, and a cap wouldn’t hurt their bottom line enough for them to exit the business.

Research from Shearer, of the Vanderbilt Policy Accelerator, found that a 10% cap on credit card rates could result in Americans saving $100 billion annually.

That rate cap would also lead to $27 billion less in credit rewards for consumers with FICO scores of 760 or lower. However, those consumers would ultimately save more in interest than what is lost from the reduction in rewards, according to Shearer.

“There might be slightly less lending at the margins, and we would see some reduced rewards, and banks would need to pull back on their excessive advertising budgets, but it’s not the sky-is-falling picture that banks would have you believe,” Shearer said.

But even proponents of credit card reform said Trump’s proposal contrasts with his past actions to deregulate the financial sector and gut the Consumer Financial Protection Bureau, which monitors the credit card industry.

“Trump is failing to address the affordability crisis, so he’s flailing and throwing radical ideas against the wall,” Aaron Klein, a senior fellow in economic studies at the Brookings Institute, told CNN.

Klein, who worked in President Barack Obama’s Treasury Department, said Trump should focus on capping late fees and addressing other industry practices that hurt consumers. The president last year scrapped a Biden administration-era law that capped late fees at $8 but had been blocked by a judge.

Rohit Chopra, a former director of the Consumer Financial Protection Bureau who was fired by Trump, told CNN that a cap on credit card interest rates would be meaningful, but he doubts the president will follow through.

“There is a lot of room to reform some of the abuses in the credit card industry, but based on the Trump administration’s record this past year, overall, the credit card industry has really gotten what it wants,” Chopra said.

“The credit card industry knows that the president will chicken out,” he said.

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