• Trump proposes a one-year cap on credit card interest rates at 10% starting January 20.
• Bank stocks declined following the announcement, with industry experts warning of potential credit access loss.
• Financial institutions argue the cap could harm families and small businesses by limiting credit options.

U.S. President Donald Trump has proposed capping credit card interest rates at 10% for one year starting January 20, 2026. Trump described credit card companies as having "really abused the public," emphasizing the need for change in the banking sector. However, analysts caution that the implementation of such a cap would likely require legislative action in Congress, which has previously struggled to pass similar proposals, according to Reuters and BBC.

Following Trump's announcement, shares in major banks and credit card companies, including American Express and Visa, dropped significantly, demonstrating immediate market reaction to the proposed cap. Financial institutions warned that the cap would strain their operations, possibly leading to restrictions on credit access for millions of Americans. The Electronic Payments Coalition claimed that a majority of credit card accounts of consumers with lower credit scores could be closed or have their limits drastically reduced, raising concerns about the financial impact on many households, according to NPR.

Industry analysts predict that if the cap were enacted, it could fundamentally alter the economics of credit card lending. Banks may react by limiting credit availability and increasing annual fees, which could prove counterproductive for consumers seeking affordable credit. "Capping rates would harm families, limit opportunity, and weaken the economy," stated Richard Hunt, Executive Chairman of the Electronic Payments Coalition, indicating potential adverse effects for both small businesses and individual cardholders, as noted by both Reuters and BBC.

Despite these concerns, some studies suggest a cap could significantly reduce the financial burden on consumers. A report from the Vanderbilt Policy Accelerator indicated that a 10% cap on interest rates could save Americans approximately $100 billion annually. Nonetheless, it would also likely lead to a decrease in credit card rewards, particularly affecting those with high credit scores. As the debate continues, lawmakers from both sides of the political spectrum have expressed support for the idea, complicating the legislative landscape for financial reforms, according to NPR and Reuters.