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Posted on 01/21/2026 11:41:34 AM PST by zeestephen
Analysts including Sanjay Sakhrani of KBW have said it is unlikely that a card bill will have enough bipartisan support to become law. Lawmakers from Trump's own Republican Party, including House Speaker Mike Johnson, have expressed caution when it comes to card price controls.
(Excerpt) Read more at cnbc.com ...
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First, consumer spending will drop going into the Mid-Term election, because the banks will immediately reduce credit debt limits.
Second, people with good credit [me] will immediately see their monthly cash rewards rate reduced, or even eliminated.
Reduce swipe fees. Charging x% of the charge is total gouging. The cost of a $2 swipe is the same as a $2000 swipe yet the card companies get considerably more.
And those who own stock in any and every financial institution will take a beating.
Still, there’s no way it gets through Congress.
That said, it would be good for society in the long run. Those who are not credit worthy won’t get the credit that buries them.
I haven’t paid a dime of interest on any of my credit cards in at least a dozen years.
It’s a roundabout way to try to buy votes this fall.
Why not allow individual tax deduction above 10% interest and bank make up difference to the treasury by a surtax?
My credit card gets paid off every month, on time. They’re forever bugging me to raise my credit limit, but I don’t want to.
As someone who uses credit cards but never paid a cent of interest because I pay my bill early, let’s think of what will happen:
1. Fees go up and people who use cards responsibly will pay more and/or get less.
2. The fee to stores will go up.
3. A bunch of people who shouldn’t be charging things in the first place will have their cards canceled, but the vacuum for the moron market will be filled by even more predatory rent-to-own or store-based credit.
I file this under “protecting morons at the expense of responsible people” populism, just like the war on drugs that keeps me from getting Sudafed when I need it and created a giant illegal drug underground.
Or just make all interest tax deductible like it used to be.
“1. Fees go up and people who use cards responsibly will pay more and/or get less.
2. The fee to stores will go up.”
Why do you believe that? It’s not even an argument the banks are making.
As for #3...yep.
Credit card interest debt used to be tax deductible. I think that ended in the Reagan years, as I recall.
Trump’s proposal would cap the CC interest to 10% for one year. I don’t think that will help a lot of people already in huge CC debt, but the ones it would help, this is a good thing, imho. Don’t forget the horrific harm done to our citizens during the Covid SOE that lasted 4 years, job loss, huge inflation of the basic costs of living etc etc. Here’s a synopsis about the 1+ trillion dollar CC debt, averaging about $6500 per person, not frivolous spending but mainly for the basics.
https://www.lendingtree.com/credit-cards/study/credit-card-debt-statistics/
Maybe I don’t understand exactly how credit card transaction fees work, but doesn’t someone — a bank or credit card company — have to back the transaction with $2,000 cash up front when that card is used?
As bad as credit card interest rates are, price controls (like all government price controls) on credit card interest rates are a bad idea, if not worse.
Here is what I said on a post on this topic yesterday:
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.
To be fair, banks have been caught between a rock and a hard place over the years. On the one side you have the bank’s obligation to extend credit to responsible customers based on their ability to pay off a loan. And on the other hand you have the incessant whining of activists and politicians looking to use banking regulations to force these banks to extend credit to racial/ethnic/demographic groups of financially illiterate people.
“2. The fee to stores will go up.”
Why do you believe that? It’s not even an argument the banks are making.”
They have to make up the money somewhere.
“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.”
There will be a fair amount of this, but it will be tempered by the fact that the main thing that makes people pay their bill is they are afraid of losing their ability to use their credit cards.
I have a brother who rents construction equipment and it’s always a tension between cutting someone off and extending them more credit so they can finish a job and get paid.
“Credit card interest debt used to be tax deductible. I think that ended in the Reagan years, as I recall.”
You are correct. The “Tax Reform Act of 1986” limited deductions to investment interests (which is an expense) and mortgages.
Allowing a tax deduction for suckers deep in debt with credit card interest is worse than the $7500 tax EV credit was.
“They have to make up the money somewhere.”
Not, they don’t.
Their costs will go down and their margins will go up...though total revenue goes down.
Well, there is a small fixed transaction fee, but no bank or anyone else will move a couple thousand dollars for the same charge as a couple of dollars. There are risks involved.
stores around here are already tacking on 4% or more.
I offered to pay cash to one they said “we only accept cards” so I left the items on the counter and said “I don’t pay fees when I have cash, wave your fee or I’m outta here” and outta here I went.
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