On 9 January 2026, President Trump said he supported a temporary 10% cap on credit card interest rates, to start on 20 January[1]. Card issuers' shares fell, and the industry's first response was to point out that nobody had said how the cap would be enforced.
That response is correct, but it is also the least useful way for a bank to think about the proposal.
The legal picture is uncertain
Lawyers at Ballard Spahr note that a mandatory nationwide cap would likely need Congress, and that the short timetable suggests the proposal is intended to influence lenders through public pressure rather than operate as binding law[1]. The possible routes (executive action, agency rulemaking or legislation) all face obstacles. So the most likely near-term outcome is no binding cap.
But political pressure moves pricing without legislation. Issuers facing public and regulatory scrutiny will think twice before repricing upwards, and some will look for visible gestures on rates for particular customer groups.
Why 10% matters: the size of the gap
The gap between today's pricing and the proposed ceiling is large. The Federal Reserve's latest consumer credit release shows the average interest rate on credit card plans at 21.39% across all accounts, and 22.83% on accounts actually charged interest, in the third quarter of 2025[2]. Revolving credit outstanding stood at $1,313.9 billion in November 2025.
A card rate has to cover the cost of funds, operating costs, rewards and, above all, expected credit losses. For prime customers with low loss rates, a lower rate is conceivable. For customers with thinner or weaker credit histories, a 10% rate cannot cover expected losses.
A rate cap does not make risky lending cheaper. It makes it unavailable.
That is the central economic point. A binding cap would not cut the price of credit for everyone. Issuers would cut limits, tighten approvals and close accounts for the segments they could no longer price, which are usually the customers with the fewest alternatives. Ballard Spahr's analysis makes the same point: a uniform cap could limit issuers' ability to extend credit to consumers whose risk profiles require higher pricing.
Use the proposal as a stress test
Rather than wait for the legal outcome, I would use the proposal to answer questions that boards should be able to answer anyway:
- Where does the card book's profit actually come from? Split profitability by risk band. If most of the margin sits in the riskiest segments, that is a concentration risk whether or not a cap arrives.
- What would we do at a 10%, 15% or 18% ceiling? Model approvals, limits and losses at each level. The answers show which products survive and which customers lose access.
- What are our non-rate levers? Annual fees, rewards, interchange and cross-sell all carry weight in the economics. Know how much of the product could be rebuilt around them.
- How would we explain our pricing publicly? If pressure builds, the banks that can show clearly why they charge what they charge, and what they do for customers in difficulty, will fare better than those that simply defend the status quo.
The cap may never bind. The questions it raises about concentration, pricing transparency and access to credit will outlast it.