Banks Hold Firm Against Trump's 10% Credit Card Cap
Major lenders refuse to comply with rate cap demand. JPMorgan and Citi executives warn of credit restrictions as standoff continues into second week.
Wall Street isn't blinking.
Six days after President Trump demanded banks cap credit card interest rates at 10%, the industry has offered nothing but pushback. No major lender has indicated any intention to comply. Lobbyists say they've received no formal guidance from the administration on how such a cap would be enforced.
The standoff continued Friday with bank stocks stabilizing after the initial selloff on January 12. Capital One recovered 3% from its weekly low. JPMorgan and Citigroup both finished the week flat after digesting the threat alongside their quarterly earnings.
What Banks Are Saying
Citigroup CFO Mark Mason put it bluntly on the company's earnings call Wednesday: "An interest rate cap is not something that we would or could support."
He didn't mince words about the consequences. A cap would "restrict access to credit to those who need it the most and frankly would have a deleterious impact on the economy."
Bank of America CEO Brian Moynihan offered similar warnings. "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."
The argument is straightforward. Credit card interest rates average 19.64% nationally, according to Bankrate. Banks price that rate based on default risk—cardholders who don't pay their bills subsidize those who do. Force rates to 10%, and banks will respond by tightening approval standards, lowering credit limits, and cutting rewards programs.
The Legal Question
Trump announced the cap via Truth Social, stating it would be "effective January 20, 2026." He followed up by telling reporters that banks would be "in violation of the law" if they didn't comply.
The legal basis for that claim remains unclear. Executive orders can't unilaterally rewrite private contracts between banks and consumers. Existing usury laws are state-level, not federal. The Credit CARD Act of 2009 regulates disclosures and billing practices but doesn't cap rates.
Senator Bernie Sanders and Senator Josh Hawley introduced legislation last year that would cap rates at 10% for five years. That bill—the 10% Credit Card Interest Rate Cap Act—hasn't advanced beyond the Senate Banking Committee.
Without congressional action, the administration would need to find creative regulatory pathways to enforce any cap. The Consumer Financial Protection Bureau could potentially issue rules affecting new card terms, but that would take months and face immediate legal challenge.
Industry lawyers describe the current situation as a pressure campaign rather than a policy proposal. Trump may be betting that public attention forces voluntary concessions, similar to his approach on other corporate issues.
The Math Problem
Credit card interest is the crown jewel of consumer banking profitability.
JPMorgan's card business generated $18 billion in net interest income last year. The segment's return on equity exceeds 30%, roughly double what the bank earns on mortgage lending. Cut that revenue in half and you're talking about billions in lost earnings.
For mono-line card issuers, the stakes are existential. Capital One and Discover built their entire business models around the spread between deposit rates and card rates. At 10% card APR with 4% funding costs, the economics simply don't work.
Researchers at the Consumer Financial Protection Bureau estimated last year that a 10% cap would save American households roughly $100 billion annually in interest payments. The flip side: that $100 billion currently flows to bank income statements.
One Company's Bet
Bilt, the fintech startup known for rent-payment rewards, announced Friday that it would cap new card interest rates at 10% for one year on new purchases.
The move is partly marketing—Bilt cards are premium products targeting higher-income renters who typically pay balances in full. But it demonstrates that niche players can experiment with Trump's vision even if major banks won't.
Whether Bilt's approach could scale across the industry is another question. The company doesn't disclose loss rates, and its customer base skews heavily toward low-risk borrowers. What works for a startup with a million cardholders may not work for Chase with 60 million.
What Happens Next
The most likely outcome is nothing, at least in the near term.
Banks will continue lobbying against legislative action. The administration will continue making public demands. Rates will stay where they are—averaging close to 20% for most borrowers.
If Trump escalates by directing regulatory agencies to take action, expect immediate litigation. Bank trade groups have the resources and legal standing to challenge any administrative cap on contract terms.
The political dynamic is interesting. Rate caps poll well—most voters don't particularly like banks and do dislike 20% interest rates. But actually implementing caps would reduce credit availability, potentially creating a different set of angry constituents.
For bank investors, the threat remains a headline risk rather than an earnings risk—at least until something changes in Washington. The stocks have already digested the initial shock. What happens next depends on whether Trump has a plan B or was simply testing the waters.
Friday's close suggested the market has moved on. But the January 20 deadline is Monday, and nobody really knows what the president meant when he set it.