JPMorgan Warns Trump’s Credit Card Rate Cap Could Backfire on Consumers
What Is Being Proposed—and Why Are Banks Alarmed?
JPMorgan Chase executives have warned that President Donald Trump’s proposal to cap credit card interest rates at 10% would sharply restrict access to credit and hurt consumers, joining a growing backlash from the banking industry. The proposal, announced last week in a post on Trump’s reality Social account, would impose a one-year cap begining January 20. The move caught lenders off guard and triggered a tradeoff in bank stocks.
The proposal comes as Trump faces pressure to address cost-of-living concerns ahead of this year’s congressional elections. However, the plan offered few details on how the cap would be implemented or enforced, leaving banks and policymakers scrambling to assess its implications.
“It would be very poor for consumers, very poor for the economy,” Chief Financial Officer Jeremy Barnum said during the bank’s earnings call, adding that the lender would be forced to reduce the amount of credit it offers if such a cap were imposed. “Our belief is that actually this will have the exact opposite consequence to what the administration wants.”
Investor Takeaway
Why Are Credit Cards So Central to the Debate?
Credit cards are a core pillar of U.S. consumer finance, offering households flexible, unsecured borrowing. To compensate for higher default risk, banks charge elevated interest rates. According to Federal Reserve data, the average credit card interest rate stood at 20.97% in November.
Banks argue that these margins are necessary to support lending across a broad credit spectrum. Industry groups warn that a flat cap would force lenders to tighten standards, pushing millions of households—particularly those with fragileer credit histories—out of the market.
The Electronic Payments Coalition, which represents financial institutions and card networks, said that between 82% and 88% of open credit card accounts could be closed or severely restricted under a 10% cap. Subprime borrowers would be hit hardest, but lenders also warned of higher annual fees, fewer rewards, and more monthly charges for many remaining customers.
Jamie Dimon echoed those concerns on a call with analysts, saying banks would have to “adjust your model for the added risk by this and ongoing price controls,” adding that the impact “would be dramatic.”
Do Critics Dispute the Banks’ Claims?
Not all observers agree with the industry’s assessment. Some policy researchers argue that credit cards remain highly profitable and that banks have room to absorb lower rates without cutting access as sharply as claimed.
“Banks are asking us to trust them that taking their profits away will cause the world to collapse,” said Brian Shearer, director of competition and regulatory policy at Vanderbilt University’s Policy Accelerator. “But if you look at the data, there is a huge amount of profit that could absorb a rate cut.”
Research published by the center last year found that a 10% cap could save U.S. consumers around $100 billion annually, with only a modest effect on rewards and account availability. That analysis stands in contrast to industry warnings, highlighting a sharp divide over how costs and benefits would be distributed.
show that average annual percentage rates reached their highest levels since 2015 in 2024. The share of cardholders making only minimum payments also climbed to a multi-year high, reinforcing political pressure to rein in borrowing costs.
Investor Takeaway
How Are Markets and Lawmakers Reacting?
Financial stocks reacted rapidly to the proposal. The KBW Bank Index was down 0.9% in morning trading following the announcement, while JPMorgan shares fell 2.7%. Analysts cited rising uncertainty around the credit card business model and potential political pressure on fees, including Trump’s separate comments backing lower card swipe fees.
Within Washington, the response has been mixed. said Congress should explore the idea of a cap but warned of “negative secondary effects.” Some Democrats, including Elizabeth Warren and Bernie Sanders, have long supported interest-rate limits, arguing current levels are exploitative.
Industry executives said the administration had not engaged lenders before the proposal appeared online. One senior executive said banks plan to meet with lawmakers and officials to outline potential consequences, adding that bipartisan resistance could stall any legislation. Barnum said JPMorgan would consider all options, including legal action, if forced to overhaul its business without sufficient justification.
What Comes Next?
For now, Trump’s proposal remains a political signal rather than a defined policy. Implementing a nationwide cap would likely require congressional approval and detailed rulemaking. Analysts at Morningstar said a cap is unlikely but warned that, if enacted, it would severely damage credit card profitability and push banks to retreat from higher-risk lending.
The dispute highlights a broader tension between political efforts to lower household costs and the economics of unsecured credit. Whether the proposal advances or fades, it has already reopened debate over how credit cards are priced—and how far government should go in setting those prices.
