The news: Banks are strongly opposed to President Trump’s proposal to cap credit card interest rates at 10%, effective January 20 for one year. In November 2025, the average credit card interest rate was 22.3%, the latest data available. Reactions from banks highlight concerns about the impact of a cap.

• JPMorgan Chase CFO Jeremy Barnum said a sharp reduction in credit card interest rates could undermine the economics of the credit card business and force issuers to reconsider their participation.
• Banking industry trade groups issued a joint statement opposing a cap on interest rates, arguing that it would push consumers toward credit options that aren't as well regulated and are more expensive.

But some fintechs and nontraditional banks whose businesses emphasize other credit products stand to benefit

• SoFi CEO Anthony Noto said a rate cap could push borrowers away from credit cards and toward personal loans as issuers struggle to operate profitably, leading to a pullback in card lending. Personal loan providers could fill the credit gap.
• Klarna CEO Sebastian Siemiatkowski backed the proposal, arguing that the credit card model traps poorer households with costly debt while subsidizing rewards programs that mainly benefit wealthier cardholders.

Implications for banks: In response to a rate cap, issuers would tighten underwriting standards for credit cards, leading to more denials for consumers with subprime credit scores. Credit would tighten as secured credit cards become the only viable option; consumers would seek unsecured personal loans; buy now, pay later title loans; and payroll loans.The average credit quality of other loans would deteriorate, making them more expensive. And consumers may be pushed to use high-cost and predatory credit.

If Congress is on board—including some vehement administration opponents—a rate cap could become a reality. The banking industry should be ready for a radical realignment in consumer credit—and hope that it doesn’t come to pass.