While the Trump administration’s concern about affordability is commendable, a proposed 10% cap on credit card interest rates would hurt the very people the president is seeking to help, American Bankers Association President and CEO Rob Nichols told Bloomberg TV.
President Trump this week proposed a one-year, 10% rate cap beginning Jan. 20, although he did not say how he intends to implement it. Asked about the proposal during an interview today on Bloomberg, Nichols said it was the wrong approach.
“The administration wants to help people – they’re concerned about affordability. I respect that,” Nichols said. “Unfortunately, as you learn the details of a rate cap, it actually harms the people the administration is attempting to help. Tens of millions of Americans would lose their credit cards. That would have spillover impacts on airlines, on restaurants, on retailers, on hotels. That would create a negative economic downward spiral.”
Some lawmakers have also expressed reservations about a 10% credit card rate cap. During a separate interview on Bloomberg, House Financial Services Committee Chairman French Hill (R-Ark.) said he has heard from other Republicans that the proposal could curtail credit for Americans with lower credit scores. “We campaigned against government price controls in the 2024 election,” he said.
Sen. Tedd Budd (R-N.C.) noted that credit card rates are risk-adjusted.
“If all of a sudden you cap it at 10%, there’s a lot of folks who don’t fit under that,” Budd told Bloomberg. “I don’t want to encourage consumer debt… but there are a lot of people who have pop-up medical expenses or quick home repair that they don’t have any avenue to. And if you cap this, you’re going to move a lot of people off this, and if they need money for an emergency, they’re going to end up going to loan sharks.”
