A proposed 10% annual percentage rate cap on credit cards could reshape the lending landscape, but analysts view the policy as politically driven rather than economically feasible. The move, while alarming for financial firms, is unlikely to pass due to structural and political hurdles.
- A proposed 10% APR cap could reduce credit card issuer earnings by 15% to 20%
- Major issuers include JPMorgan Chase (JPM), Capital One (COF), and American Express (AXP)
- Delinquency rates held steady at 2.8% in Q4 2025
- S&P 500 Financials Index dropped just 0.3% following the proposal announcement
- Analysts believe legislative passage is highly unlikely due to political and structural barriers
- Banks are proactively shifting to lower-rate products and fee-based revenue models
The proposal to cap credit card APRs at 10% has sparked concern among investors, particularly given the sector’s reliance on high-margin interest income. Credit card issuers, including major players like JPMorgan Chase (JPM), Capital One (COF), and American Express (AXP), generate significant revenue from revolving balances, with average rates often exceeding 20% in 2025. A 10% cap would compress net interest margins, potentially reducing annual earnings by an estimated 15% to 20% for top issuers, according to internal modeling cited by financial analysts. Despite the theoretical impact, a senior analyst at Jefferies noted that the proposal is unlikely to become law. The analysis highlights that even if former President Donald Trump were to return to office in 2025, legislative success would require bipartisan support in Congress and a favorable Senate landscape—conditions not currently aligned. With key Senate committees showing resistance to rate caps and regulatory agencies already under scrutiny for overreach, the path to implementation remains obstructed. Market reaction has been muted, with credit card sector stocks showing minimal volatility post-announcement. The S&P 500 Financials Index dipped only 0.3% in the days following the proposal, indicating investor skepticism about its viability. Meanwhile, credit card delinquency rates remained stable at 2.8% in Q4 2025, reinforcing the view that risk models are already accounting for macroeconomic pressures without need for regulatory intervention. The focus has shifted toward regulatory risk mitigation, with banks beginning to adjust product offerings—such as introducing lower-rate secured cards and increasing fee-based income—to reduce exposure. This strategic pivot suggests long-term resilience in the sector despite short-term noise.