How Trump’s 10% Credit Cap Would Hit The Payments Industry

Trump’s proposed 10% cap on credit card interest for one year would sharply squeeze issuers’ interest income, likely trigger tighter underwriting, and push business models toward more fees and changes to rewards — reshaping how banks, fintechs and card networks make money from payments. It would be a direct hit to high-APR revolvers and subprime portfolios, while transaction volumes and merchant fees would matter even more to the economics of the payments ecosystem.​

What Trump is proposing

• President Trump has called for a one‑year nationwide cap limiting credit card interest rates to 10%, starting January 20, 2026, but has not detailed whether this would be done via legislation or regulation.​

• Average US credit card APRs are currently above 22%, with many cards charging 20–30%, so the cap would bite hardest on the majority of revolving balances.​

Immediate revenue impact on issuers

• Banks earn from cards via interest on revolving balances, cardholder fees, and interchange/merchant fees, with interest currently a major profit driver; a 10% cap would sharply cut that interest stream on existing high‑APR balances.​

• Analysts estimate a one‑year 10% cap could reduce large bank earnings before tax by roughly mid‑single to high‑teens percentages from cards, and could “wipe out earnings” at some specialist lenders heavily concentrated in high‑APR credit.​

Likely changes in credit supply and pricing

• Industry groups warn that a 10% ceiling would lead issuers to pull back from riskier segments, with tighter underwriting and fewer cards for non‑prime borrowers, particularly below about a 700–740 FICO range.​

• To offset lost interest income, issuers are expected to raise or introduce more annual fees, higher late/penalty fees where legally allowed, and possibly higher merchant discount/interchange in markets where they have scope to do so.​

Effects on networks, acquirers and fintechs

• Card networks (Visa, Mastercard, Amex, Discover) are less exposed to interest income and earn mainly from transaction volume and assessments, but slower credit growth and weaker rewards programs could dampen spend, which markets have already started pricing in via falling stocks.​

• Payments processors, acquirers and BNPL/alt‑credit fintechs could see mixed effects: reduced traditional card credit may push more volume toward buy‑now‑pay‑later and other installment products, but regulators may respond by tightening rules on those substitutes as well.​

Consumer and competitive dynamics

• Consumer advocates and some economists estimate that a 10% cap, even for one year, could cut total interest paid by over $100 billion, delivering large savings to heavy revolvers and pressuring banks to compete more on fees and service than on opaque APR structures.​

• However, banks argue that reduced access to revolving credit would push some consumers toward less regulated, higher‑cost products such as payday loans or fringe lenders, changing the competitive landscape and shifting risk outside the regulated card system.​