A new credit card policy proposed by Donald Trump in early 2026 could significantly alter consumer borrowing conditions, impacting interest rates, credit availability, and financial institution profitability. The plan’s implications extend across major banks and consumer finance sectors.
- Proposed 18% cap on credit card APRs, down from current average of 22.5%
- JPM, MA, and V projected to see 4–6% decline in credit card earnings over two years
- New rules would limit balance transfer fees and mandate clearer rate disclosures
- Potential reduction in credit availability for subprime borrowers
- Regulatory compliance costs expected to rise for large financial institutions
- Pre-market stock movements reflect investor concern: V down 1.8%, JPM down 0.9%
Donald Trump’s recently unveiled credit card reform proposal aims to cap annual percentage rates (APRs) at 18% for all new credit card products issued by major financial institutions. This measure targets the current average APR of 22.5% reported by industry data, potentially reducing borrowing costs for millions of cardholders. The initiative is designed to limit high-interest lending practices seen across consumer credit portfolios, particularly among larger issuers like JPMorgan Chase (JPM), Mastercard (MA), and Visa (V). The policy would also require lenders to provide simplified rate disclosures and restrict balance transfer fees on cards with promotional periods below 12 months. These changes are expected to lower default risks associated with predatory lending but may reduce revenue streams for credit card divisions, which contributed $37 billion in net income for top U.S. banks in 2025. The reform could force banks to restructure their credit risk models and alter product design strategies. Market analysts project that if enacted, the plan could lead to a 4–6% decline in credit card-related earnings for JPM, MA, and V over the next two fiscal years. Regulatory compliance costs may rise as institutions adapt to new reporting standards tied to the proposed framework. Smaller credit unions and fintech lenders may benefit from increased competition, though they could face challenges scaling under tighter capital requirements. The broader impact includes potential shifts in consumer spending patterns. Lower APRs could stimulate credit usage, but tighter issuance rules might reduce access for subprime borrowers. Financial markets reacted cautiously: V shares dropped 1.8% in pre-market trading, while JPM edged down 0.9%, reflecting investor concerns about profit margins. The proposal’s fate remains uncertain as it faces scrutiny from congressional oversight committees ahead of potential legislative action.