Thoughts on Trump's 10% Cap

My Friday night went sideways when President Trump tweeted that he plans to cap interest rates on consumer credit cards to 10% for a year starting on January 20, 2026. (I know he doesn’t use Twitter, and also I won’t call it X, but I really can’t use “truthed” as a verb)

First, while I am not a lawyer, and definitely not a constitutional law attorney, I don’t think that the President of the United States can simply decree a cap on credit card interest rates. Congress may be able to pass a bill, which the President could sign into law with a cap on interest rates. Such a law is something that a motley group of politicians from Bernie Sanders (I) and Alexandria Ocasio-Cortez (D) to Josh Hawley (R) have been advocating (at times 10%, at times 15%). 

Second, even if some path to regulation exists here, it may only be relevant for nationally chartered banks. Different states have different caps on interest rates today, and cards issued out of those states typically are regulated by those regulations. (See CardsFTW #154 and CardsFTW #171.) Would the interstate commerce clause allow the federal government to preempt state rules here? Maybe. Can the President decree it? I don’t think so.

The idea of an immediate (nine days!) cap on credit card interest rates is stunning, but I don’t think it can happen. Plus, there's TACO: Trump may simply move on. The cynic in me believes this is both an attempt to distract from other political headlines and to curry favor with voters ahead of a challenging midterm season. (“AFFORDABILITY!”)

A 10% cap!

Filed under irony, in chatting through this with the compliance experts here at Totavi, they want to point out that:

1. Federal bank regulators don’t have pricing authority; they are prudential regulators focused on safety and soundness.
2. There is a Federal agency that (may be) positioned to enforce this cap, and it’s one of Trump’s favorites: the Consumer Financial Protection Bureau!
3. Yet, when the CFPB has tried to regulate pricing (see the credit card late fee cap), it hasn’t been able to do so and has been stopped in court.
4. The CFPB has been explicitly barred from setting Federal usury rates under the Dodd-Frank Act.

So, you would need to amend Dodd-Frank and give more power to the CFPB. What a world we would live in.

All that, plus, realistically, banks can’t change fees in a few days. Legal requirements are to provide 45 days notice to material changes in terms (you could argue lower rates are fine because it’s lower, but probably banks would want to add fees), and regulators would need to start to evaluate the compliance with this.

Phew.

Ok, so, putting aside whether or not Trump can enact this, let’s talk about what it would mean. There is an argument that credit card interest rates are too high and are predatory. The average credit card interest rate right now is about 20%, or approximately 15% higher than the baseline secured overnight funds rate (SOFR) target set by the Federal Reserve. 

Research by the Fed (see CardsFTW #154) posits that credit card companies do charge a higher-than-expected APR, given the risks associated with their lending, by up to 2%. Two percent is not 10%, however. So let’s talk about why credit cards are expensive forms of lending:

1. For the most part, they are unsecured, meaning there are no assets to recover.
2. They are open-ended, meaning that the underwriting process at account opening must account for long-term changes in the borrower’s financial health and behavior.
3. They are revolving, meaning that money can be borrowed repeatedly.
4. They have transactional fraud that must be covered (e.g., stolen card numbers).

I’ve seen arguments that personal loans are counterpoints to credit cards. Personal loans are also unsecured, but they do not revolve and have clear paydown schedules. I don’t think they are cheaper: according to Bankrate, personal loans vary from 6.24% to 35.99% depending on the lender and your credit score. That looks a lot like credit card rate ranges, if you ask me. Yes, credit cards average 20%, but users often get low-interest-rate offers, or long-term 9.99% rates, while others are charged very high rates like 29.99 or 34.99%.

Credit cards incur heavy losses and operating costs: 3-4% in losses (fraud and write-off), plus 3-4% in operating costs, plus 1-2% in rewards. Add that to the overnight funds rate (3.64%), and you get 10.64% on the low end. Banks certainly aren’t going to give money away. 

The story is even worse for fintech programs. Even the largest companies pay more than SOFR. Robinhood’s latest 10-Q disclosed its newest warehouse fund costs as SOFR plus 1.4%, and that its weighted average cost of capital as of the end of Q3 2025 was 6.45%. That’s a full 2.81% higher than the bank's rate at SOFR and the best rate I’ve heard of for a fintech program. New fintech card programs often pay more than 10% on their own funding, which, again, leads to them losing money when lending at 10% to end consumers.

It is also true that consumers are willing to trade a higher rate for rewards (which isn’t a very good trade if you ever do carry a balance). Maybe folks think they won’t carry balances, but in the end, they often do (see CardsFTW #186).

In recent years, we have seen alternative secured cards, like Aven’s home equity card (see CardsFTW #176). These cards have lower APRs (Aven’s midpoint as of this writing is 11.24%). Lower doesn’t mean (a) all rates are under 10% or (b) that this is the best rate you can get, or that (c) the loan is the most affordable (taking cash out of Aven’s card costs 2.5% for your draw).

Look, I’m not trying to argue that one product is clearly better than another, or that any one rate is correct or fair. I prefer a free market. I think the market can and should continue to set credit card interest rates. Consumers have many lending choices. Some folks, unfortunately, have poor credit and take out very high-interest pawn or payday loans. Some folks have better credit and can use cards for short-term or emergency lending.

If we were to see a 10% interest rate cap, the credit cards of today would go away. End of story. Only those with excellent credit would be able to get cards, and the benefits and credit availability would be quite different. All of this would be a boon for debit cards! (And a challenge for rewards systems.) Maybe that is a social good, but I would guess that many millions of consumers would instead have to turn to much higher-cost loans.

Apple Card to JP Morgan

After much speculation, we finally know that the Apple Card portfolio is moving from Goldman Sachs to JPMorgan Chase. 

Goldman Sachs lost a significant amount of money over the years with its now-concluded foray into consumer finance. At one time, having purchased personal finance companies like Clarity Money to build out Marcus and personal loans, launching the Apple Card, and acquiring the GM credit card portfolio, Goldman is now ditching all of it.

So long, Apple Card from Goldman Sachs

The Apple Card portfolio is quite large, and few issuers would have the capacity (and perhaps the interest, given its reputation) to take it on. Chase always wants to grow, it seems, and I have no doubt they will right the ship.

What does this mean for Apple Card holders? Well, we don’t know much yet (there is only this webpage). I assume Chase will:

1. Launch a revised product on a new BIN
2. Migrate folks
3. Try to offboard some folks

Goldman had a very broad underwriting box and was writing cards with limits ranging from $250 to $40,000. That’s a wild card product. I think we’ll see something more in line with traditional issuers from Chase.

What stands out most is the experience changes that will likely occur: Apple offers daily rewards payouts, which is rare among cards, and a deeply integrated, API-driven experience. Chase is likely to deliver a similarly API-driven model, and card management will almost certainly be integrated alongside other Chase cards. At the same time, daily rewards are likely to be eliminated, and billing cycle timing will almost certainly change as part of the transition.

Me, Elsewhere

10% credit card rate caps are bad for credit card companies, but turn out to be a good way to get a quote in Bloomberg.

Before all the nonsense started, I was excited to make it into the Fortune Term Sheet 2026 Crystal Ball edition, alongside other fintech luminaries! 

CardsFTW

CardsFTW, released weekly on Wednesdays, offers insights and analysis on new credit and debit card industry products for consumers and providers. CardsFTW is authored and published by Matthew Goldman and the team at Totavi, a boutique consulting firm specializing in fintech product management & marketing. We bring real operational experience that varies from the earliest days of a startup to high-growth phases and public company leadership. Visit www.totavi.com to learn more.

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