JPMorgan says Trump’s credit card cap would hurt consumers and the economy
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Top JPMorgan executives, including chief executive Jamie Dimon, said Mr Trump’s proposed 10 per cent cap on credit card interest rates would severely hurt consumers in growing industry pushback.
PHOTO: REUTERS
NEW YORK - Top JPMorgan executives, including chief executive Jamie Dimon, have warned that US President Donald Trump’s proposed 10 per cent cap on credit card interest rates
Mr Trump, who is under pressure to address voters’ cost-of-living concerns ahead of 2026’s mid-term congressional elections, last week on his social media platform Truth Social proposed the cap for one year starting on Jan 20, in a surprise move that blindsided the industry and sent financial banking stocks tumbling.
The industry has been scrambling to rebut the proposal, pushing new data that argues a cap would result in millions of households losing access to credit, although some industry experts dispute the analysis, arguing that credit cards are highly profitable and banks have room to lower rates.
On Jan 12, the Electronic Payments Coalition, which represents financial institutions and card networks, said that 82 per cent to 88 per cent of open credit card accounts would be closed or severely restricted under a 10 per cent cap. While subprime borrowers would be hardest hit, a cap would lead to higher annual fees for most borrowers, reductions in credit card rewards and more monthly account charges, lenders argued.
“You would have to adjust your model for the added risk by this and ongoing price controls,” Mr Dimon of JPMorgan said in a call with analysts. “It would be dramatic.”
JPMorgan chief financial officer Jeremy Barnum told reporters on an earnings call on Jan 13: “It would be very bad for consumers, very bad for the economy.” He added that the bank would have to cut back the amount of credit it offers.
“Our belief is that actually this will have the exact opposite consequence to what the administration wants,” said Mr Barnum.
Credit cards generate strong returns for banks, which charge high rates to compensate for the greater risk of default on card loans, which are unsecured. The average interest rate in November stood at 20.97 per cent, according to the US Federal Reserve.
“Banks are asking us to trust them that taking their profits away will cause the world to collapse. But if you look at the data, there is a huge amount of profit that could absorb a rate cut,” said Mr Brian Shearer, director of competition and regulatory policy at Vanderbilt Policy Accelerator, a research centre at Vanderbilt University.
A 10 per cent cap would save Americans US$100 billion (S$129 billion) annually with only a modest impact on rewards and accounts, the centre found in research published in 2025.
Industry scramble
According to another senior industry executive, Mr Trump’s post also caught some government officials by surprise, and the administration had not, as at Jan 12, engaged with lenders to discuss the proposal.
Executives aim to hold meetings in the coming days with administration officials and lawmakers to explain the adverse consequences of a cap, this person said. He added that several lawmakers in both parties did not support the proposal, and that he did not expect the Senate to advance a Bill on the issue.
“There’s just so little... information,” Mr Barnum added on a post-earnings call. “This is happening very quickly in a sort of unconventional way, starting with a social media post.” When asked in a separate call with reporters if the company would pursue legal action against rate caps, Mr Barnum said: “If you wind up with weakly-supported directives to radically change our business that aren’t justified, you have to assume everything is on the table.”
In another jab at the financial industry, Mr Trump overnight also voiced support on Truth Social for lowering card swipe fees.
Analysts said the growing headwinds for the credit card ecosystem were hurting investor sentiment on financial stocks.
The KBW Bank Index, which tracks large-cap lenders, fell 1.3 per cent on Jan 13. JPMorgan shares sank 4.2 per cent.
The White House did not respond to a request for comment. US House Speaker Mike Johnson said on Jan 13 that Congress should explore the idea of a cap, but warned of “negative secondary effects”.
Some Democrats, including senators Elizabeth Warren and Bernie Sanders, have pushed such caps, arguing credit card rates are exploitative. REUTERS
