President Donald Trump’s call for a one-year cap of 10% on credit card interest rates has evolved into more than a policy soundbite. It is now a flashpoint that exposes long-standing tensions in the U.S. consumer finance system, pitting banks and card issuers against fintech executives and consumer advocates, while raising questions about how far government should go in reshaping private markets.
Trump framed the proposal as a response to what he described as excessive borrowing costs, arguing on Truth Social that Americans are being “ripped off” by rates that can climb into the 20% and 30% range. Although Congress would need to legislate any such cap, the idea has already unsettled financial markets and boardrooms because it strikes at one of the most profitable segments of retail banking.
For large banks, credit cards are not only a lending product but a cornerstone of broader customer relationships, driving deposits, payments, and loyalty. Executives from JPMorgan Chase, Citi, Bank of America, and others have been unusually direct in warning that a blunt interest rate ceiling would undermine the economics of that system. Their central argument is that higher rates subsidize risk. Remove that pricing flexibility, they say, and lenders will respond by tightening approval standards, shrinking credit limits, or exiting parts of the market altogether.
Jamie Dimon, JPMorgan’s chief executive, captured that concern when he told investors that sharply lower rates could hurt customers with weaker credit profiles most, because banks would be less willing to lend to them at all. Citi’s finance chief Mark Mason went further, warning that a cap could have a “very negative impact on the economy,” not just on banks, by constricting consumer spending at a time when growth remains uneven.
The airline industry has also sounded the alarm, underscoring how intertwined credit cards have become with sectors far beyond banking. Delta Air Lines chief executive Ed Bastian said a 10% cap would “upend the whole credit card industry,” highlighting the risk to co-branded card partnerships that generate billions of dollars annually through rewards programs and interchange fees. Those partnerships, particularly with American Express, are a major source of predictable cash flow for airlines.
Yet the pushback from incumbents has been met by an equally forceful counter-narrative from parts of the fintech world. Klarna chief executive Sebastian Siemiatkowski has emerged as one of the most vocal supporters of Trump’s idea, arguing that the traditional credit card model is designed to encourage persistent debt at high interest rates. In his view, the system disproportionately penalizes lower-income borrowers while rewarding wealthier users who pay off balances monthly and collect perks such as cash back and airline miles.
Siemiatkowski’s support reflects a broader critique that has gained traction in recent years: that credit card rewards are effectively cross-subsidized by borrowers who carry balances, often at punitive rates. From that perspective, a cap is not just a consumer protection measure but a corrective to what supporters see as a structurally unfair market.
Other executives see opportunity rather than threat. SoFi chief executive Anthony Noto suggested that if traditional card lending contracts are under a rate cap, alternative products such as personal loans could fill the gap. His comments point to a likely second-order effect of any cap: credit demand would not disappear, but could migrate to different forms, potentially reshaping the competitive landscape in consumer lending.
Critics of the proposal warn that this migration could be dangerous. Bill Ackman, the billionaire head of Pershing Square, argued that restricting rates would push some borrowers out of regulated credit markets entirely, increasing reliance on informal or higher-cost options. While he acknowledged Trump’s stated goal of lowering borrowing costs, Ackman said structural reforms to encourage competition and innovation would be more effective than price controls.
The debate also carries political and historical echoes. Interest rate caps have surfaced repeatedly in U.S. policy discussions, particularly during periods of high inflation or public frustration with banks, but they have rarely advanced far in Congress. Opponents often cite lessons from state-level usury laws and international examples, arguing that strict caps tend to reduce credit availability rather than make borrowing cheaper overall.
What makes Trump’s proposal notable is not just the policy itself, but the signal it sends. It aligns with a broader pattern of his administration, showing greater willingness to challenge entrenched corporate interests, even in sectors traditionally aligned with free-market orthodoxy. Whether the proposal is ultimately enacted or not, it has already forced a public reckoning over who benefits from the current credit card system and who bears its costs.
The central tension has so far remained unresolved, even as lawmakers weigh the idea. Supporters argue that unchecked interest rates amount to consumer exploitation. Opponents counter that credit, by its nature, must be priced for risk, and that blunt intervention could do more harm than good.
