Trumps proposed cap on credit card interest sparks industry concerns

Such a requirement could diminish credit card profit margins, leading to stricter lending requirements as well as reductions in the number of points rewarded for purchases made with co-branded cards. 
Other possibilities include higher annual fees and less generous sign-up offers for co-branded cards, said John Kiernan, managing editor of personal finance company Wallet Hub.
Co-branded cards aimed at higher-risk consumers would likely take the biggest hit.

Co-branded cards aimed at higher-risk consumers would likely take the biggest hit. "If a 10% interest cap goes through, we can expect a lot of lower-tier cards to go away or be a lot more expensive," Kiernan said.  Trump called for the cap in a Jan. 9 post on Truth Social, saying he wanted it to take effect Jan. 20 and last for a year.  "Please be informed that we will no longer let the American Public be ripped off by Credit Card Companies that are charging Interest Rates of 20 to 30%, and even more," Trump wrote. The Jan. 20 date came and went without the president following with a concrete step, such as an executive order. However, experts say a cap on interest rates likely would require Congress to pass a law. A bipartisan bill introduced in the Senate last February by Bernie Sanders (I-Vt.) and co-sponsors Josh Hawley (R-Mo.), Kirsten Gillibrand (D-N.Y.) and Jeff Merkley (D-Ore.) would require a 10% cap through 2031, but it hasnt gone anywhere. Still, corporate stakeholders are taking notice. In a Jan. 13 earnings call, JPMorganChase CFO Jeremy Barnum said that a 10% interest cap would lead to a much tighter credit environment, especially for consumers with low credit scores.  JPMorganChases card partners in the travel industry include United, Southwest, Marriott and IHG, among others. The company also issues the Chase Sapphire travel credit cards.  Aside from banks, airlines and their outsize loyalty programs would likely be most impacted by a limit on interest rates. Delta, the U.S. leader in credit card revenue, made $8.2 billion from its partnership with American Express in 2025. And airlines use their credit cards as tools for loyalty program engagement.  Carriers earn income from co-branded cards by selling rewards points to the issuing bank, which then awards those points to cardholders for making purchases or as a sign-up incentive. Banks finance those point purchases through annual credit card fees, credit card interest and transaction fees paid by merchants, called swipe fees.  Plus, travel suppliers could suffer indirectly if fewer consumers have airline points to help pay for trips. Data compiled by the U.S. Travel Association in 2023 showed that a 10% decrease in travel booked via credit card rewards would mean 1.5 million fewer annual trips. For now, U.S. Travel is taking a wait-and-see approach.  "Were doing our homework now to measure what the impact would be," said Erik Hansen, U.S. Travels head of government relations. "Weve heard a lot of concerns from our members about potential impacts. But this is a long way from being implemented."  Delta CEO Ed Bastian was similarly reserved, noting in a Jan. 13 call with investors that an interest cap would likely require legislation. If a 10% cap comes to pass, he said, low-cost airlines would likely suffer most because they cater to a less affluent customer base. While the travel industry would likely be a loser, consumers could benefit from an interest rate cap. According to the Federal Reserve Bank of St. Louis, the average U.S. credit card interest rate in November was 22.3%; thats up from 16.6% in February 2020.  U.S. credit card debt was $1.23 trillion as of the end of September, according to the Federal Reserve Bank of New York.  A Vanderbilt University study in September concluded that capping the interest rate at 10% would save consumers $100 billion annually. However, banks, which currently enjoy profit margins of approximately 30% on credit cards, would need to trim rewards payouts by no more than $27 billion to maintain profits, resulting in a net annual benefit to consumers of $73 billion, the Vanderbilt study concluded.  "Credit card banks compete based on rewards, so they are likely to cut into profit margins before resorting to reducing rewards," the study said.