As Trump’s deadline for a cap on credit card rates looms, banks have only questions and no answers

President Trump’s demand for credit card companies to cap interest rates at 10% by January 20 has left industry leaders, consumer advocates, and politicians scrambling for clarity as the deadline approaches. The White House has yet to specify consequences for non-compliance, creating uncertainty across the financial sector.

White House Press Secretary Karoline Leavitt confirmed the president’s position last Friday, describing it as both “an expectation and frankly a demand,” though she declined to outline specific penalties for companies that fail to meet the target.

The proposal, first floated during Trump’s 2024 presidential campaign, could deliver significant consumer benefits. Research highlighted by the White House suggests Americans would save approximately $100 billion annually in interest payments under a 10% cap. While the credit card industry would remain profitable, analysts predict companies might scale back rewards programs and other customer perks to offset revenue losses.

Bank lobbyists have been working frantically to understand the administration’s intentions, but many report being left in the dark about implementation details. Although both Republican and Democrats have introduced bills in Congress addressing credit card interest rates in recent years, Republican leadership has shown little appetite for legislating rate caps.

Regulatory obstacles further complicate the situation. The Dodd-Frank Act, passed after the 2008 financial crisis, explicitly prohibits at least one federal banking regulator from setting usury limits on loans, potentially limiting administrative options.

Without clear legislative or executive action, Trump may rely on political pressure – a tactic he’s successfully employed with other industries. The pharmaceutical sector responded to his demands for lower drug prices with voluntary commitments, while technology companies like Apple pledged to increase domestic manufacturing after similar presidential pressure.

Wall Street appears reluctant to enter an open conflict with the administration, especially given the financial industry’s gains under Trump’s deregulatory agenda. The “One Big Beautiful Bill” signed in July delivered another round of significant tax cuts, while regulatory rollbacks have fueled a wave of corporate dealmaking that generated substantial fee revenue for major banks.

Banking industry representatives have adopted a two-pronged response: pushing back against the proposed cap while simultaneously signaling willingness to work with the White House on affordability issues. JPMorgan Chase, one of the nation’s largest credit card issuers with $239.4 billion in customer balances and partnerships with United Airlines, Amazon, and Apple, has indicated readiness to fight the proposal with all available resources.

Mark Mason, Citigroup’s chief financial officer, told reporters on Wednesday that a cap “is not something we could or would support,” warning it would restrict consumer credit access and harm economic growth. However, Mason also acknowledged affordability concerns, adding, “We look forward to collaborating with the administration on ways we can address this.”

Trump has further escalated pressure on the industry by endorsing congressional legislation that could reduce the interchange fees banks collect from merchants when customers use their cards.

At least one financial company has moved proactively to align with the president’s vision. Fintech firm Bilt launched new credit cards this week featuring a 10% interest rate cap on new purchases for one year. While effectively a promotional offer similar to those common in the industry, Bilt’s approach could provide a template for meeting White House demands without fundamentally restructuring business models.

“If (a credit card rate cap) is going to happen, we’d rather be at the forefront,” explained Bilt CEO Ankur Jain in a recent interview.

As the January 20 deadline approaches, both the administration and the banking sector face mounting pressure to clarify how this potentially transformative policy will be implemented and enforced across the $1 trillion credit card market.