Trump’s Proposed Credit Card Interest Cap Would Hit $70 Bn Market For Debt

Trump has proposed a one‑year cap of 10% on credit card interest rates, and analysts say this would pressure the roughly $70 billion US market that bundles card debt into asset‑backed bonds. The proposal is politically significant but faces major practical and legal hurdles, so markets currently see a low chance of it being fully implemented.​

What the proposal is

• President Donald Trump has called for a nationwide 10% ceiling on credit card annual percentage rates (APRs) for one year, with an intended start date of 20 January 2026.​

• The plan is framed as a move to make borrowing more affordable for consumers, given average US credit card rates are around 20%.​

Why a $70bn market is at risk

• Around $70 billion of credit card receivables are packaged into asset‑backed securities (ABS), which pay investors from the interest and fees cardholders generate.​

• A 10% cap would sharply cut the “excess spread” on these bonds, a key profit and loss‑absorbing buffer, with JPMorgan strategists warning it could fall toward stressed levels seen during the 2008 crisis.​

Banks’ and investors’ concerns

• JPMorgan and other large banks argue that lower allowed rates would force tighter lending standards, reduce credit limits, and particularly hit higher‑risk “non‑prime” borrowers.​

• Moody’s Ratings says a 10% cap would be negative for credit card bonds across the board, especially for deals backed by riskier borrowers, and could shrink new issuance over time.​

Impact on consumers

• For existing cardholders paying more than 10%, the cap would lower interest costs if fully applied, but many higher‑risk borrowers would likely lose access to mainstream credit cards.​

• Banks could respond by raising annual fees, trimming rewards, or cutting promotional offers, shifting costs away from interest but still reducing overall value for many users.​

How likely it is to happen

• There is no clear legal mechanism yet: a binding national rate cap would almost certainly require an act of Congress, and the current Sanders–Hawley 10% cap bill has stalled.​

• With Congress hesitant and the industry preparing to challenge any aggressive executive action, many analysts expect the proposal to exert political pressure but not become a hard, enforceable rule in its current form.​