Why banks are so worried about a 10% cap on credit card fees

Banks and lenders have been on edge since President Trump took to social media Friday night to call for a 10 percent cap on credit card interest rates for one year. These fees are a major source of revenue for card issuers, which have fought legislative attempts to curb them for decades.

But the president’s call appears to be more of a wish than a mandate: There is no obvious path for his administration to unilaterally impose an interest rate cap, and Congress has shown little interest in heeding his request.

Bank leaders and industry lobbyists are dancing around the issue, trying to avoid publicly disparaging the president’s executive order while privately insisting that it would backfire if consumers’ access to credit were restricted.

Still, bank stocks have come under heavy pressure this week, particularly those with major credit card companies like Capital One; Its shares have fallen 7 percent since Mr. Trump’s post. Citi is down nearly 8 percent.

If lending becomes less profitable, banks are forced to reduce their credit lines and limit their credit card offerings.

“You would have to adjust your model to accommodate the additional risk,” said Jamie Dimon, chief executive of JPMorgan Chase, which has the largest share of outstanding balances in the country. “If it happened the way it was described, it would be dramatic.”

Will an interest rate cap become a reality?

Legal and financial experts say a federal cap on credit card interest rates would almost certainly require congressional action — and so far there is no sign that Republican leaders are interested. Spokesman Mike Johnson criticized the president’s plan, saying it could have a “negative impact on a lot of people” because credit card companies might decide to stop lending to some consumers.

Should the White House nevertheless make a legislative push, there is some support in Congress on both sides. Senators Bernie Sanders of Vermont and Josh Hawley of Missouri introduced a bill last year that would cap fees at 10 percent for several years. Without the president’s support, the bill stalled but was revived.

On Monday, Senator Elizabeth Warren of Massachusetts spoke about her economic vision for the Democratic Party. The president called them shortly afterward and discussed his desire to cap card fees.

“I said, ‘Great, let’s get something done,'” she said on CNBC on Wednesday.

After calling for tariff limits on the campaign trail, Mr. Trump “didn’t lift a finger to try to get anything passed,” Ms. Warren said.

Mr. Trump could try to force the issue with an executive order, but that would quickly be met with lawsuits from credit card companies. And the president cannot lean on the Consumer Financial Protection Bureau, the federal agency tasked with protecting consumers but which his administration has largely gutted. Under the Dodd-Frank Act, the agency is prohibited from setting “usury limits”—or interest rate caps—without an order from Congress.

How much would this save households?

According to the Federal Reserve, credit card debt in the United States now exceeds $1.21 trillion, and about 37 percent of American adults carry a credit card balance.

Average interest rates have trended upward over the past two decades, reaching 22 percent in November. If those rates were reduced to 10 percent, consumers could save $100 billion a year, or about $899 per person, according to an analysis by researchers at Vanderbilt University.

Updated

January 16, 2026, 9:03 p.m. AND

How much would it cost lenders?

Analysts and researchers say a cap would be a major blow to the bottom lines of banks and other credit card issuers.

The industry collected $160 billion from interest fees in 2024 – more than 50 percent more than the $105 billion lenders took in in 2022, according to an analysis by the consumer bureau.

That’s more than financial giants earn from other key profit areas such as stock trading profits and commissions. Major banks earned a total of $133 billion from their market trading in 2023, according to an analysis by two researchers at the Federal Reserve Bank of Boston and Harvard Business School.

Capital One, for example, earned $22 billion in interest from its credit card business in 2024. A 10 percent cap would wipe out half of that revenue, estimates Michael Miller, an analyst at Morningstar, a financial services company.

“The credit model simply doesn’t work in terms of mass-market credit cards with a 10 percent interest rate cap,” Mr. Miller said.

Would this really reduce credit availability?

Banks warn that a cap would mean they would have to cut lending rather than lend money at a loss.

“People are going to lose access to credit, and on a very, very large and broad basis, especially the people who need it the most, frankly,” JPMorgan Chief Financial Officer Jeremy Barnum said on the company’s earnings call Tuesday.

Mike Santomassimo, Wells Fargo’s chief financial officer, made similar comments to reporters Wednesday morning, saying that “the availability of credit to a broad range of people would have a significant negative impact.”

But some researchers point out that there are ways for banks to issue credit cards with lower interest rates and still make money. In a 2025 analysis by the Federal Reserve Bank of New York, researchers concluded that marketing costs were a major factor in the rate hike.

“Credit card banks spend an average of 1 to 2 percent of their assets on marketing annually – ten times as much as other banks,” the researchers write. “The largest credit card banks are among the top marketers in the world, with budgets comparable to those of consumer giants like Nike and Coca-Cola.”

Vanderbilt University suggested in an analysis that with a 10 percent cap, lenders could choose to cut their marketing budgets rather than their lines of credit and still make a profit. In this scenario, a reduction in credit availability would only affect the riskiest borrowers – those with a FICO score of 600 or less.

Banks warn that in an attempt to increase affordability for the average American, the White House may deny loans to financially struggling households and push them toward alternatives such as short-term loans, which may charge even higher interest rates.

What happens next?

Banks are preparing for a fight if the president tries to pass his demand into law.

Five major trade groups issued a public statement last week saying they “share the president’s goal of helping Americans access cheaper credit.” However, the groups said, “There is evidence that a 10 percent interest rate cap would reduce credit availability and have devastating consequences for millions of American families and small business owners who rely on and value their credit cards.”

Banks and their lobbyists will continue to fight publicly and privately, said Erika Najarian, an analyst at UBS. They will warn borrowers that a cap would limit credit availability; Privately, she said, they could offer concessions to Washington in return for rejecting the proposal.

Mr Trump said he wanted the cap to take effect on January 20 – the first anniversary of the start of his second term.

With less than a week to go until that deadline, no major lender has voluntarily lowered their interest rates. And with Congress showing no urgency for legislative action, industry analysts believe the most likely outcome is that the president’s call goes unanswered, at least for now.