“`html
Trump Issues Ultimatum to Credit Card Industry: 10% Rate Cap by January 20th
A looming deadline and uncertain consequences have left consumer advocates, lawmakers, and financial institutions bracing for a potential showdown with the White House over credit card interest rates.
President Donald Trump has challenged the credit card industry to cap interest rates at 10% by January 20th, a demand that has sparked confusion and concern across the financial landscape. With just days remaining, the specifics of how the administration intends to enforce this policy remain unclear, raising questions about the seriousness of the threat and the potential repercussions for both consumers and the industry.
White House Stance remains Vague
So far, the White House has offered little detail regarding the consequences for credit card companies that fail to comply. White House Press Secretary karoline Leavitt stated on Friday that the administration is “evaluating all options” to ensure affordability for consumers, but stopped short of outlining specific enforcement mechanisms. The lack of clarity has fueled speculation that the administration may resort to public shaming or other forms of political pressure.
Potential impact on Consumers
While a 10% cap could offer significant relief to consumers burdened by high-interest debt, experts warn of potential unintended consequences. Reduced rewards programs and stricter lending criteria are likely outcomes, perhaps making it harder for individuals with lower credit scores to access credit, albeit potentially at the expense of credit card rewards and perks.
Lobbying Efforts and Congressional Resistance
Bank lobbyists have reportedly spent the past week attempting to ascertain the White House’s plans, but have been largely kept in the dark. Despite previous attempts to legislate a cap on interest rates – with bills introduced in both the House and Senate over the years – Republican leadership in Congress has historically shown little appetite for such measures.
The Dodd-Frank Act, enacted in the wake of the 2008 financial crisis, further complicates the situation, explicitly prohibiting at least one federal bank regulator from establishing usury limits on loans.
Political Pressure as a Potential Tool
Without legislative action or an executive order,the administration may rely on political pressure to compel the industry’s compliance – a tactic Trump has employed in the past. He previously demanded price reductions from pharmaceutical companies, resulting in pledges from industry CEOs, and urged chipmakers and tech companies to relocate production to the U.S., prompting commitments from companies like Apple.
Wall Street wary of Conflict
Wall Street appears hesitant to engage in a full-scale conflict with the White House, particularly given the benefits banks have reaped from the Trump administration’s deregulatory agenda. The “One Big Gorgeous Bill,” signed into law in July, delivered another round of significant tax cuts, while deregulation spurred dealmaking and boosted investment banking revenues.
Industry Response: Pushback and Collaboration
The response from the banking sector has been a carefully balanced one. Executives have publicly pushed back against the proposed cap while together expressing a willingness to collaborate with the administration.
Jeffrey Barnum, Chief Financial Officer of JPMorgan, indicated on Tuesday that the industry was prepared to “fight with all resources at its disposal” to prevent the implementation of a rate cap.JPMorgan, a major player in the credit card market, currently holds $239.4 billion in customer balances and maintains co-brand partnerships with companies like United Airlines and Amazon, and recently acquired the Apple Card portfolio from Goldman sachs.
Citigroup’s Chief Financial Officer, Mark Mason, echoed these concerns on Wednesday, stating that a cap “is not something we could or would support,” citing potential restrictions on consumer credit and harm to the economy. Though, Mason also emphasized, “Affordability is a big issue, and we look forward to collaborating with the administration on ways we can address this.”
Further Pressure and Alternative Approaches
Trump has further escalated pressure on the industry by endorsing a bill in congress that could reduce bank revenue from merchant fees.
however, some companies are proactively addressing the potential changes. Fintech company Bilt launched a new credit card this week, capping interest rates at 10% for new purchases for a year. This move, while framed as a promotional offer, demonstrates a potential pathway for the industry to meet the White House’s demands without fundamentally disrupting its business model.
“If [a credit card rate cap] is going to happen, we’d rather be at the forefront,”
