Trump Proposal to Cap Credit Card Limits Could Reshape $70 Billion Market

A new policy proposal from Donald Trump targeting credit card usage has triggered concern among financial stakeholders, with implications for the $70 billion U.S. credit card debt market. The plan would impose a national limit on credit card balances, aiming to reduce consumer debt accumulation. If enacted, the cap would directly impact major credit card issuers and financial institutions that rely on revolving credit revenue. The proposed cap could significantly reduce the volume of outstanding credit card balances, which currently exceed $1.2 trillion. With issuers like Visa (V) and Mastercard (MA) deriving nearly 15% of their annual revenue from interchange fees on credit card transactions, a reduction in transaction volume could lead to declining fee income. JPMorgan Chase (JPM), the largest U.S. credit card issuer, holds over $160 billion in credit card receivables—more than any other bank—and would face direct exposure to reduced lending capacity. Citigroup (C) and Disney (DIS), which operate branded credit cards for millions of consumers, could see drops in cardholder engagement and interest income. The proposal may also encourage consumers to shift toward alternative credit products, such as personal loans or store credit, altering the competitive landscape within the consumer finance sector. Market analysts suggest that such a policy could prompt regulatory scrutiny of credit limits and risk management practices across the industry. Financial markets reacted cautiously, with Visa and Mastercard shares slipping 1.7% and 1.3% respectively in early trading. Analysts are assessing the potential ripple effects on net interest margins and credit loss provisions, particularly if tighter credit conditions reduce default rates but also slow revenue growth. The political timing of the proposal—just months before a potential presidential election—adds uncertainty to its legislative prospects.