Why Trump’s Credit Card Plan Is Unlikely to Pass

A proposed 10% cap on credit card interest rates from President Donald Trump could deal a significant blow to U.S. card issuers’ profits and business models — but Wall Street analysts say the odds of it becoming law remain slim.

Trump said in a social-media post Friday that he plans to move forward with a campaign pledge to impose a one-year cap on credit-card APRs, starting January 20. The surprise announcement immediately rattled financial markets and sent shares of major consumer lenders sharply lower.

However, Jefferies analyst John Hecht said in a Saturday note that Trump lacks the executive authority to impose such a cap on his own. Any attempt to push the proposal through Congress would likely be “dead on arrival,” he wrote, citing the wide-ranging economic impact and the lack of support for similar measures in the past.

Raymond James policy analyst Ed Mills added in a Sunday note that interest-rate caps are typically governed by state law, not federal mandates. While the political risk has increased now that the president has publicly raised the issue, Mills said the overall legislative risk remains relatively low.

Why a 10% Cap Would Change the Credit Market

Analysts and banking-industry groups warn that a 10% cap would not simply mean cheaper credit. Instead, card issuers would likely tighten lending standards, limiting access to credit for borrowers with lower credit scores.

That could lead to slower consumer spending, weaker retail sales, and a drag on overall economic growth, according to Hecht.

Which Companies Are Most Exposed

Hecht evaluated the potential impact on several major card lenders, including:

• American Express (AXP)
• Atlanticus Holdings (ATLC)
• Bread Financial (BFH)
• Capital One Financial (COF)
• Synchrony Financial (SYF)

Visa and Mastercard would be largely unaffected since they do not lend directly to consumers.

Following the announcement, Synchrony and Capital One shares each fell about 9% in premarket trading.

American Express Would Still Take a Hit

While American Express serves a more premium customer base, Hecht estimates that a 10% cap would still cut its net interest margin to about 5.7% from 9.2%. The impact would be far more severe for lenders with greater exposure to subprime borrowers.

Bottom Line

Despite the market’s sharp reaction, analysts believe the proposal faces major legal and political hurdles. For now, the idea is more of a headline risk than a base-case scenario — but it underscores growing political scrutiny of the consumer credit industry.