Trump’s Proposal to Cap Credit Card Interest Rates Faces Slim Odds of Passing
By Manya Saini
Jan 12 (Reuters) – U.S. President Donald Trump’s recent proposal to cap credit card interest rates at 10% has made waves in the financial world, but analysts on Wall Street believe that the likelihood of this proposal passing into law is slim.
Credit cards play a crucial role in U.S. consumer finance, offering households the flexibility to access credit. However, the high interest rates associated with credit cards can make carrying balances expensive for consumers. On the flip side, these high rates are a significant source of profit for banks and card issuers.
The debate over interest rate caps has divided Washington for years, with some advocating for consumer protection and others concerned about restricting access to credit.
President Trump’s proposal for a one-year cap on credit card interest rates at 10% starting on January 20 has raised concerns among credit card issuers. However, analysts at TD Cowen believe that implementing such a cap would require Congressional approval, rather than an executive order.
The likelihood of a credit card interest rate cap passing through legislation at the federal level is deemed low by experts, citing previous failed attempts to introduce a national rate cap.
Affordability has become a key political issue in the lead-up to the U.S. mid-term elections, with voters increasingly concerned about the cost of daily essentials.
Currently, the average credit card interest rate in the U.S. stands at approximately 19.65%, according to Bankrate. This high rate disproportionately affects lower-income households who rely on credit cards for everyday expenses.
Analysts at Barclays and Jefferies both express skepticism about the feasibility of implementing a credit card interest rate cap without strong congressional support. Past attempts at similar measures have struggled to gain traction in Congress.
(Reporting by Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)
