Banks Prepare to Challenge Trump’s 10% Credit Card Rate Cap Plan

President Donald Trump has proposed capping credit card interest rates at 10%, a move that big banks like JPMorgan Chase say they will fight with every tool available. The idea came up as part of Trump's push to lower costs for everyday Americans carrying high-interest debt. Bank executives made clear during recent earnings talks that they see this as a threat to their business and to broader credit access across the country.

Background

Credit card rates have sat at high levels for years, often above 20% for many cardholders. This helps banks cover the risk of people not paying back what they borrow. Trump floated the 10% cap idea in recent weeks, tying it to his larger goal of easing financial pressures on working families. The proposal hit as banks kicked off their fourth-quarter earnings reports this week, with JPMorgan Chase and others reporting strong results despite market jitters over the plan.

Bank stocks dipped on Monday after Trump's comments. Investors worried that lower rates would squeeze profits from credit cards, a key part of bank income. JPMorgan, the largest U.S. bank by assets, handles millions of credit card accounts. Its leaders have watched similar ideas before, like caps pushed during past administrations, but say this one feels different given Trump's influence.

The backdrop includes steady loan growth heading into 2026. Banks reported year-over-year loan increases picking up to 5-6% recently, up from just 1% earlier. This momentum comes from deregulation and more mergers under the current administration, which has backed bank activity in many areas. Trump's rate cap stands out as a counter to that support.

Key Details

JPMorgan executives signaled during earnings prep that no option is off the table in responding to the cap. They point to the math behind credit cards: some portfolios see loss rates of 5-7%. At 10% interest, banks argue they could not cover those losses without raising standards for who gets approved.

Impact on Borrowers

Right now, credit cards help millions who might not qualify for traditional loans. Banks use higher rates to offset defaults from riskier borrowers. A forced drop to 10% could mean fewer approvals, leaving more people without access to credit for emergencies or daily needs. Analysts tracking the sector say this would hit lower-income groups hardest, as they rely more on cards.

Bank leaders expect to keep rates as they are unless Congress acts. An executive order alone would not force the change, but pressure from the White House could build. JPMorgan's team has started mapping out responses, from lobbying lawmakers to public campaigns explaining the risks.

"Everything's on the table," a JPMorgan spokesperson said when asked about fighting the proposal.

Earnings calls this week highlighted resilience. JPMorgan and Bank of New York Mellon both posted solid numbers, with card spending holding up despite higher rates. But executives warned that a cap would reverse gains, potentially slowing the 2-2.5% growth they forecast for 2026.

What This Means

For everyday card users, a win for banks could keep rates high but ensure wider access. If Trump pushes through the cap, expect tighter lending rules. Banks might approve fewer cards, demand higher credit scores, or shift focus to wealthier customers. This could mean billions less in available credit nationwide.

The economy faces ripple effects. Consumer spending drives U.S. growth, and credit cards fuel a big chunk of it. Less credit could crimp retail sales, travel, and other sectors. Banks say the change would not just hurt their bottom lines but slow overall expansion at a time when loan growth is finally accelerating.

Lawmakers will play a key role. Past efforts to cap rates stalled in Congress, where banking committees weigh consumer protection against industry health. Trump allies in finance circles have already voiced doubts, calling the idea a political play without real backing.

Smaller banks and credit unions might feel the pinch more, as they lack the scale of giants like JPMorgan. Some could exit the card business altogether if margins vanish. Meanwhile, fintech firms offering cards might adapt faster, but they too rely on data showing rising defaults in tough times.

Trump's team frames the cap as relief for families drowning in debt. Average balances top $6,000 per household, with minimum payments eating into budgets. Banks counter that responsible use matters, and lower rates reward everyone while punishing no one. The fight pits consumer aid against market realities.

Wall Street watches closely. Bank shares rebounded after early dips, betting the cap stays talk, not law. But if it gains steam, expect more volatility. JPMorgan's size gives it clout in Washington, where it has long pushed back on rules seen as overreach.

Broader deregulation under Trump has helped banks merge and expand. Loan books grew as economic data improved, with Friday reports showing momentum. A rate cap could undo that, forcing a rethink of strategies built on higher yields.

Card issuers track every move. They adjust approvals daily based on risk models. A 10% world would upend those, likely shrinking portfolios by millions of accounts. Borrowers with good credit might see little change, but others could turn to payday loans or skip purchases.

The proposal tests Trump's balance between populism and business support. Banks hope their warnings land, preserving a system that, for all its flaws, keeps credit flowing. As earnings unfold, more details will emerge on how far they plan to push back.