Trump’s Proposed Credit-Card Rate Cap Sparks Concern Over Consumer Trade-Offs

A new policy initiative by Donald Trump aims to limit credit card annual percentage rates (APRs) to a maximum of 18%, a move that would mark a significant shift in consumer finance regulation. The proposal, introduced ahead of potential 2028 presidential campaigning, targets high-cost borrowing practices widely criticized across political lines. However, financial experts warn that such a cap could reduce credit availability, especially for borrowers with lower credit scores. The current average APR on credit cards is 23.5%, according to recent industry data, with some subprime consumers facing rates above 30%. A hard cap at 18% would affect major issuers including Visa (V), Mastercard (MA), and Citigroup (C), which derive substantial revenue from interchange fees and interest income. Analysts estimate that banks could see net interest margins drop by 6–8 percentage points if the rule is implemented without corresponding adjustments. Market reactions have already begun to surface. Shares of Citi and Bank of America fell 1.4% and 0.9% respectively in pre-market trading, reflecting investor concern over reduced profitability. Meanwhile, credit card delinquency rates—currently at a 5-year low of 2.8%—could rise if lenders tighten underwriting standards to compensate for narrower margins. Regulatory uncertainty has also triggered caution among fintech lenders. Startups relying on high-yield credit products may scale back operations or exit certain markets, potentially reducing competition and innovation in the consumer credit space.