Banks Really Hate Trump’s Credit Card Proposal

Summary

Podcast Summary: Big Take – "Banks Really Hate Trump’s Credit Card Proposal"

Date: January 23, 2026
Host: Sarah Holder (Bloomberg News)
Guest: Claire Ballantine (Bloomberg Finance Reporter)

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Overview

This episode of "Big Take" investigates former President Donald Trump’s ambitious proposal to cap credit card interest rates at 10% for one year—a plan that has sent shockwaves through the banking sector. With credit card debt levels hitting record highs and interest rates sitting at an average of 21%, the podcast explores what this cap could mean for both banks and consumers, and whether it’s politically or practically feasible.

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Key Discussion Points & Insights

Trump’s Davos Speech and Announcement

• Trump’s recent speech at the World Economic Forum at Davos highlighted American affordability and credit card debt as national concerns.
• He announced his intention to ask Congress for a one-year, 10% cap on credit card interest rates (03:15).

“He went on to announce he's asking Congress to cap credit card interest rates at 10% for one year.”
— Sarah Holder (03:15)

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The Banking Industry’s Fierce Backlash

• Banks consider credit cards as one of their most profitable products, referring to them as their "crown jewels".
• Executives warn of negative repercussions:
  • Potential to trigger a recession
  • Credit contraction, especially for riskier borrowers
• Jamie Dimon (JPMorgan Chase CEO) at Davos:

“In the worst case, you have to have a drastic reduction of the credit card business. I mean drastic. I mean like 10%. I mean like 80%. It would remove credit from 80% of Americans and that is their backup Credit.”
— Jamie Dimon, JPMorgan Chase (08:13)

• The Bank Policy Institute offers a lower figure: Approximately 14 million people could lose or have credit lines reduced (08:25).

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The Debt and Interest Landscape for Consumers

• Americans carried a record $1.23 trillion in credit card debt in Q3 2025 (05:28).
• Federal Reserve data: Average credit card interest rate is about 21% (04:41).
• High rates compound hardship for those unable to pay their balances.
• The Card Act (2009) offers some protection against abuses but does not cap interest rates federally; state usury laws are inconsistent and often ineffective due to banks’ locations (04:53).

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The Rationale – Banks vs. Reformers

• Banks’ argument:
  • High rates are necessary due to unsecured nature of credit card lending.
  • Without collateral (like a house or car), risk—and thus interest—must be higher (06:25).
  • Revenues from interest support perks (e.g., travel rewards) and bank profitability.
• Counterpoint:
  • Advocates believe banks’ profit margins are so high there’s room to reduce rates without endangering business models.
• One study from Vanderbilt suggests capping rates could reduce consumer payments by over $100 billion a year (05:28).

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Potential Economic and Consumer Consequences

• Reduced Access:

  • Banks claim they wouldn’t lend “unprofitably”; a cap would mean less credit for risky borrowers, pushing some to even more expensive alternatives (e.g., payday loans) (09:29).
  • Not all consumers would benefit—many would lose access to credit entirely.

• Industry Anecdotes:

  • JPMorgan Chase: Credit card interest generated $25.5 billion for their cards/auto division in 2024 (07:45).
  • Bank and fintech industry considering how to adapt—some may offer select low-rate cards in response.

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Political Prospects: Can the Cap Actually Happen?

• Trump initially set a (missed) compliance deadline.
• Two routes to implementation:
  • Executive order (potentially subject to legal challenges)
  • Congressional legislation (13:08)
• Historical attempts:
  • 2019: Sanders and Ocasio-Cortez proposed a 15% cap.
  • 2025: Sanders and Hawley (bipartisan) proposed a 10% cap (13:19).
  • Elizabeth Warren expressed willingness to work with Trump if he’s “serious about affordability” (13:39).

“Talk is cheap, but if he's really ready to put up and get something done, then let's do it.”
— Elizabeth Warren (as quoted by Claire Ballantine, 13:39)

• Obstacles:
  • Disagreement on specifics among lawmakers
  • Strong lobbying by banks and the financial services industry (14:06).
  • Messaging battle: Banks warn of negative consumer impacts; reformers highlight bank profits and consumer relief needs.

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Notable Banking Counter-moves

• Some firms may experiment with cards capped at 10% for a year (Bilt, Bank of America, Citigroup), though industry is not adopting a universal cap (14:39).
• Motivations are seen by some as an attempt to “appease the President” and avoid harsher legislation (15:19).

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Memorable Quotes & Notable Moments

• Jamie Dimon’s dire warning about “drastic reduction” in credit access (08:13).
• Elizabeth Warren’s pragmatic willingness to cross the aisle: “If he's really ready to put up and get something done, then let's do it.” (13:39)
• Claire Ballantine on the root issue:

  “A lot of people don't realize…the cap wouldn't just mean…suddenly they aren't being charged as much interest…It would mean that people wouldn't be able to get credit cards and wouldn't be able to borrow money in the way that they are right now.” (08:41)

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Timestamps for Key Segments

• 02:11: Trump’s Davos speech and credit card plan
• 03:15: Announcement of the 10% interest cap
• 05:28: Credit card debt statistics, consumer impact
• 07:45: Bank perspective on profitability and potential business changes
• 08:13: Jamie Dimon's forecast for the industry
• 09:29: Potential consequences for access and risk
• 13:08: Policy paths and political feasibility
• 14:39: Industry counter-responses
• 15:19: Banks’ appeasement efforts

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Conclusion

The episode captures a pivotal economic and political moment: Trump’s interest rate cap proposal alarms the banking industry while reigniting a long-running debate over consumer credit protections in the U.S. The impact, as analyzed with clarity by Sarah Holder and Claire Ballantine, could range from genuine consumer relief to credit market disruption. The fate of the proposal now hangs between political will, industry lobbying, and the evolving affordability crisis facing American borrowers.

Transcript

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[Sarah Holder]

Bloomberg Audio Studios Podcasts Radio News President Donald Trump was front and center at the World Economic Forum at Davos this week with an unprecedented and winding speech on Greenland, Europe and NATO.

[Narrator/Commercial Voice]

It's great to be back in beautiful Davos, Switzerland.

[Sarah Holder]

If you haven't heard it, we've linked our episode on Trump's case for why the US should take over Greenland and NATO and Europe's response in our show notes. Trump's speech also included a nod to a key issue for many Americans affordability.

[Narrator/Commercial Voice]

One of the biggest barriers to saving for a down payment has been surging credit card debt.

[Sarah Holder]

And a return to an idea from his presidential campaign, capping interest rates on credit cards.

[Narrator/Commercial Voice]

The profit margin for credit card companies now exceeds 50%, one of the biggest. And they charge Americans interest rates of 28%, 30%, 31%, 32%.

[Sarah Holder]

He went on to announce he's asking Congress to cap credit card interest rates at 10% for one year.

[Claire Ballantine]

This directive from Trump is targeting banks crown jewels. And that really is what credit cards are to a lot of these really.

[Sarah Holder]

Profitable banks in the U.S. claire Ballantine is a finance reporter for Bloomberg News.

[Claire Ballantine]

We just had bank earnings season and the banks have spoken out against it. And we've even seen certain bank CEOs say that, you know, it could potentially even cause a recession. If Trump imposes this executive order, the.

[Narrator/Commercial Voice]

Lack of credit would result in greatly reduced consumer spending and would likely bring on a recession.

[Claire Ballantine]

That was the Capital One CEO said that this week. So banks really hate it. But yeah, I mean, credit card debt is a huge issue for a lot of Americans.

[Sarah Holder]

I'm Sarah Holder and this is the big take from Bloomberg News today on the show what Trump's proposed cap on credit card interest rates could mean for banks and would it help or hurt borrowers?

[Claire Ballantine]

A lot of Americans have credit card debt. The reason that a lot of credit card debt is so harmful for Americans is the high interest rates that come with carrying a balance.

[Sarah Holder]

According to the Federal Reserve, the average credit card interest rate was around 21% last year.

[Claire Ballantine]

If you pay your card off every month, you don't have a balance, but if you do, there's a really high interest rate for it.

[Sarah Holder]

The Card act, which was passed in 2009, protects cardholders from sudden rate hikes and hidden fees. But as it stands, there's no federal law limiting the rates lenders can charge. Usury laws, which exist at the state level, can cap interest rates, but they vary greatly. And since they often apply to where banks are headquartered and not where cardholders live, consumers might still end up paying a rate higher than their state's cap. The result is a patchwork system of protections and a mounting debt burden on American consumers.

[Claire Ballantine]

In the third quarter of 2025, US borrowers were carrying a record 1.23 trillion in credit card debt. That's according to the New York Federal Reserve. And it's really easy for this kind of thing to sp spiral with interest rate payments. And there's one study from Vanderbilt that says that capping interest rates at 10% could reduce consumer interest payments by more than 100 billion a year.

[Sarah Holder]

Right now, credit card issuers, which are tied to banks, set the interest rates on their cards. JPMorgan Chase, Citi and Capital One account for nearly 80% of the U.S. credit card market by credit and charge volume. And Claire says collecting interest is a fundamental part of their business and a very profitable one. That's why proponents of capping interest rates think there's room to lower rates and still allow the banks to make money. Banks see things differently.

[Claire Ballantine]

So the reason that credit card interest rates are so high, banks would argue, is because you're borrowing money. When you're carrying a balance on a credit card, that's not your money, but you're supposed to pay it back. And unlike with a loan, you know, say like a house or a car, where if you don't pay it, banks can repossess it, you can have a car taken away, a home taken away with credit cards and putting money on credit cards, there's no way for them to do that. So that's why banks argue that the rates have to be as high as they are. Various stakeholders can argue with how high it is if they really need to be that high. You know, if banks could still make a profit with a slightly lower interest rate. That is all really in the, in the zeitgeist of conversation right now. But in general, it's a big part of bank's business model. And, you know, for consumers that have, you know, these fancy credit cards that give them perks like airline access and things like that, these high interest rates on cards are a lot of the ways that those things are able to be offered. You know, some of these CEOs have come out and said that doing this and hurting banks profitability and potentially reducing credit access to consumers could be a real negative for the economy.

[Sarah Holder]

JPMorgan Chase, for instance, said its credit card interest rates drove the bulk of the bank's $25.5 billion of revenue for its card services and auto unit in 2024. A 10% cap, the bank said, could significantly change its card business and be bad for consumers.

[Narrator/Commercial Voice]

It would be a economic disaster, and I'm not making up because our business, you know, we would survive it.

[Sarah Holder]

That's JPMorgan Chase CEO Jamie Dimon at Davos earlier this week.

[Narrator/Commercial Voice]

In the worst case, you have to have a drastic reduction of the credit card business. I mean drastic. I mean like 10%. I mean like 80%. It would remove credit from 80% of Americans and that is their backup Credit.

[Sarah Holder]

A trade group for banks puts the number of people who could be impacted much lower, though it's still significant. The Bank Policy institute estimates around 14 million people and families could have their credit lines eliminated or reduced if a 10% cap is introduced.

[Claire Ballantine]

This all goes back to this idea that, you know, banks aren't going to lend unprofitably and not being able to charge these fees has led a lot of experts to say that if they can't charge these high interest rates, they're going to pull back on allowing some of the riskiest borrowers to have credit access. A lot of people don't realize that that, you know, the cap wouldn't just mean, you know, suddenly they aren't being charged as much interest on their card balances. It would mean that people wouldn't be able to get credit cards and wouldn't be able to borrow money in the way that they are right now. You know, borrowers with lower credit scores might not be born to get credit cards if the interest rate was capped and that could theoretically push them into.

[Sarah Holder]

Much riskier credit products, products like payday loans, which can have even higher interest rates than credit cards coming up. Capping credit card interest rates is an idea that's historically had bipartisan support for the relief it could bring borrowers who fall behind on payments. Could it go from proposal to policy?

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[Sarah Holder]

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[Claire Ballantine]

I think that's something that perhaps, you know, Trump and other lawmakers are kind of banking on, is that there has been support for this from both sides of the aisle.

[Sarah Holder]

In 2019, Senator Bernie Sanders and Representative Alexandria Ocasio Cortez, both Democrats, proposed a 15% cap. And just last year, Sanders and Republican Senator Josh Hawley teamed up on a bipartisan bill proposing a 10% limit.

[Claire Ballantine]

Talk is cheap, but if he's really.

[Sarah Holder]

Ready to put up and get something done, then let's do it. On CNBC last week, Democratic Senator Elizabeth Warren said she'd work with Trump if he's serious about addressing affordability, including making credit card caps a reality.

[Claire Ballantine]

There have been really broad bipartisan support over the years. You know, that's very different, though, than.

[Sarah Holder]

Actually passing something why haven't we seen a credit card interest rate cap before?

[Claire Ballantine]

One, lawmakers can't really agree on, you know, the exact specifics of it. And two, you know, there's really powerful lobbying from. From banks and from the financial services industry that is saying that we need to have these high interest rates, and then if not, you know, then that could have negative effects for consumers. So it's. It's almost, you know, a messaging question. And, you know, the big banks in the US Are really powerful. You know, they make a ton of money. They employ a lot of. And so there's really strong pushback from the financial industry.

[Sarah Holder]

But Claire says some banks may be considering responding to Trump's idea with their own counteroffers. Bilt, a firm known for offering rewards on rent and mortgage payments, is unveiling three new cards that will have rates capped at 10% for a year. Bloomberg has also reported that bank of America and Citigroup, according to people familiar with the matter who asked not to be identified, citing private information, are both separately considering offering cards with a 10% rate. Representatives for bank of America and Citigroup declined to comment. But a selection of cards with lower rates isn't the same as a universal cap.

[Claire Ballantine]

I think, you know, right now, this started out with Trump coming out with this broad proposal that would be really bad for banks. And now banks are sort of trying to say, how could we appease the President? They're not offering those because they think they're gonna make the exact same amount of money they are from their products that have higher interest rates. But I think they are trying to figure out how they can maybe appease Trump and get him to back off of this broader threat.

[Sarah Holder]

This is the big take from Bloomberg News. I'm Sarah Holder. The show is hosted by me, David Gura, and Juan Ha. The show is made by Erin Ed, David Fox, Eleanor Harrison Dengate, Paddy Hirsch, Rachel Lewis, Kriski Naomi Ng, Julia Press, Tracy Samuelson, Naomi Shaven, Alex Sugiura, Julia Weaver, Yang Yang, and Taka Yasuzawa. To get more from the Big take and unlimited access to all of bloomberg.com, subscribe [e-mail] podcastoffer thanks for listening. We'll be back on Monday.

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