Posted on 01/20/2026 9:31:23 AM PST by Miami Rebel
President Donald Trump a week ago told the credit card industry it had until Jan. 20 to comply with his demand for a 10% cap on interest rates. With just days to go, consumer groups, politicians, and bankers alike remain unclear on what the White House has planned and whether Trump even remains serious about the idea. So far, the White House has not provided any detail about what will happen to credit card companies that don’t lower card rates. White House Press Secretary Karoline Leavitt said the president has “an expectation” that credit card companies will accede to his demand that they cap interest rates on credit cards at 10%. “I don’t have a specific consequence to outline for you but certainly this is an expectation and frankly a demand that the president has made,” she said Friday.
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If credit card companies comply—it will be huge.
My guess is that they will also have higher qualifications needed for applicants for new credit cards. Which would also be a good thing.
I’m not sure what legal leverage the White House has. I think none.
If rates are capped, there’ll be consumer meltdown.
I’m buying bank stocks and ETFs on the sell-off.
There won’t be a consumer meltdown. It will be anti-inflationary, which is a good thing.
Yeah, they will respond: They will slash credit lines; they will triple the fees; they will increase transaction fees; and they will deny credit to marginal customers.
You cannot expect the stocks to rise continually and at the same time put in price controls.
Price controls NEVER work.
When states tried to limit credit card interest rates they all moved to South Dakota because SD did not have a cap on interest rates.
If a significant proportion of card holders are denied credit, of course it will reduce consumer spending.
That’s anti-inflationary, to be sure, but so is a recession.
Funny, the White House had all the authority it needed for operation gatekeeper. Banks got to refuse service to gun manufacturers, conservative groups, and other businesses they didn’t like.
I guess it’s different when Democrats are doing it
The credit card companies got themselves into problems when they just blanket sent out cards to anyone that had a mailbox.
Credit card companies started mass-mailing unsolicited credit cards in 1958, pioneered by Bank of America with its BankAmericard (now Visa) in Fresno, California, a tactic known as the “Fresno Drop,” which rapidly grew the card’s user base and established the modern revolving credit model. This marked a major shift from earlier, limited-use store cards to a general-purpose card, leading to the widespread practice of unsolicited mailings through the 1960s. It was specifically designed as the first “true” credit card that introduced the concept of revolving credit, allowing consumers to carry a balance from month to month rather than requiring full payment at the end of each billing cycle. And the companies that used it were given the equipment and opportunity to gain customers for free. So it was an open invitation to fraud.
This in time led to a mass forfeiting of the cards based upon lack of payments, and high use of the cards before they were shut off leaving an outstanding balance to the card companies. So the companies started raising interest rates to compensate for their losses. Now because of the widespread use of the cards the card companies can get over their heads really quick.
And today, the highest credit card interest rates (APRs) are typically found on cards for people with poor credit, reaching near 36%, with cards like First PREMIER and Total Visa often featuring rates at or above 35.9%. While there’s no federal cap, these high rates are for subprime borrowers, as national banks can often bypass state usury laws, leading to rates well over 30% on some store or subprime cards, exceeding the average. But as the number of cards is blindly being sent out, the average APR has to go up to defend their investment. So everyone pays the price for those that fraudulently act for themselves.
wy69
Elizabeth Warren has entered the room.
The downside is your credit limit will be slashed and you will have to pay for the privilege of using the card on a monthly basis.
Banks will just make other customers pay to make up the difference.
I agree that credit card interest rates are too high.
I also agree that government set interest rates are another form of price controls by government fiat. Nixon tried it and it was a disaster. It leads to misallocation of resources, usually a negative disruption in the supply of whatever the price control is trying to regulate.
What is likely to happen is:
1. Millions of people will be told their credit card issuer is closing off their account from any additional increase in their card balance at this time (cannot buy anything else on your card) - ending how much credit is extended to them no matter how far the present balance is from their supposed credit limit - effectively telling customers that whatever their balance is it is now their credit limit.
2. Then they will raise the minimum payment due amounts on all cards to demand faster payoff of the existing balance.
3. New card offerings that have not been taken yet will likely not been accepted when submitted by many if not most customers they were sent to.
4. Only the very very top credit rated customers will get any new cards at the 10% interest rate limit.
In sum, credit will shrink immensely for the majority of Americans. The economy will slump.
Any, ANY, way down from present credit card interest rates will result in a gross reduction of the dollars of credit extended to Americans, and that reduction will initially produce a reduction in consumer spending, and can slow the economy.
The movement to an economy that sees greater personal savings is going to be an economy that goes through an adjustment for less, annually, gross personal spending. That might be a long term good thing, but the politicians that create that movement will pay a heavy price, because the present economy is DEPENDING on that spending.
By what mechanism, legal or otherwise, does he do this?
The room she entered was the Oval Office.
BINGO! BINGO! BINGO!
A cold-turkey reversal of our credit system will crash the economy.
It will be outright deflationary. Credit limits will be slashed or eliminated completely.
Reasonable swipe fees based on the cost of the swipe and not the amount would much more beneficial.
Will have to see how this pans out. I have have excellent credit and have a card sponsored via my CU for 10% and no fees. It has been like that for years. I have a rewards card with a major money center bank. I pay $50 a yearly fee and interest is around 20%. It doesn't really matter to me, but why the disparity in interest charged.
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