U.S. banks are confronting a complex political and financial dilemma following President Donald Trump’s call to cap credit card interest rates at 10% for one year, a move that has stirred concern among industry leaders and investors alike. The announcement, made on January 10, 2026, has left banks scrambling to determine how to respond amid uncertainty over legal authority and enforcement mechanisms.

Trump’s Proposal and Market Reaction

President Trump proposed a one-year cap on credit card rates starting January 20, aiming to address affordability concerns for American consumers amid rising living costs. The announcement sent shockwaves through financial markets, temporarily affecting the share prices of major credit card issuers.

While the White House frames the measure as a response to consumer financial pressure, no detailed regulatory guidance or executive order had been issued as of the announcement, leaving banks unsure of how to comply. Analysts note that enforcing such a rate cap would likely require congressional legislation, which historically has struggled to pass similar proposals.

Industry Confusion and Talks with the Administration

Several sources from major banks reported that the finance sector is engaged in ongoing discussions with the Trump administration to clarify expectations. White House economic adviser Kevin Hassett suggested that banks could voluntarily offer “Trump cards” — credit cards featuring lower rates and fewer benefits — as an alternative to legislative enforcement.

Industry experts noted that banks have historically resisted legislative efforts to cap credit card interest rates, citing potential impacts on profitability and credit availability. Nevertheless, the administration’s public call has prompted heightened attention and strategic planning within major U.S. lenders.

Stephen Biggar, a banking analyst at Argus Research, said, “There will likely be ongoing conversations between the industry and the administration, although the exact course of action remains uncertain.”

Potential Banking Responses

Banks are exploring creative solutions to meet the administration’s directive without violating business principles or undermining profitability. Options include:

• Offering new credit card products with capped interest rates but fewer features or rewards.
• Creating no-frills cards targeting specific consumer segments at rates around 10%.
• Adjusting credit limits or risk models to maintain lending standards while providing relief to borrowers.

Some financial institutions, including Bank of America, already have lower-rate credit cards on the market, which could serve as models for broader adoption.

Challenges for Banks and Investors

Credit cards are among the most profitable products for major U.S. banks, and a rate cap could affect future earnings expectations and shareholder sentiment. Analysts warn that policy uncertainty could create short-term market volatility, affecting bank stocks and investor confidence until clear regulatory guidance emerges.

Brian Mulberry, senior portfolio manager at Zacks Investment Management, said, “Policy volatility is likely to create market volatility until there is a clear path forward for banks and regulators.”

Political and Economic Context

Trump’s proposal is part of a broader push to address consumer financial stress ahead of congressional elections, echoing promises made during his previous presidential campaign. The administration has framed the move as a response to rising borrowing costs, which it attributes to policies from the previous administration, while seeking to ensure broader access to affordable credit.

The coming weeks will test how banks balance regulatory expectations, market realities, and consumer pressures, as they navigate an uncertain political environment that could reshape credit card offerings in the United States.