JPMorgan CFO Warns of Economic Impact from Trump’s Proposed Credit Card Cap

Understanding the Consequences of Trump’s Proposed Credit Card Interest Rate Cap

Finance experts warn there could be significant consequences on the broader economy and consumers’ access to credit if President Donald Trump’s proposed 10% cap on credit card interest rates is implemented. JPMorgan’s CFO, Jeremy Barnum, highlighted these potential negative outcomes during a call related to the bank’s fourth-quarter earnings release.

The Potential Impact of the Interest Rate Cap

Barnum suggested the proposed cap would alter the provision of credit dramatically, leading to a widespread loss of credit access, particularly for individuals who need it most. This could create a “severely negative consequence for consumers and, frankly, probably also a negative consequence for the economy as a whole.” He also noted that the cap would present a significant challenge for JPMorgan’s credit card business.

For more detailed insights into the potential implications of the cap, read the full report on Trump’s Proposed Credit Card Interest Rate Cap.

How Could the Interest Rate Cap Affect the Economy?

According to Matt Schulz, LendingTree’s chief consumer finance analyst, the rate cap could lead banks to be less willing to provide credit cards to anyone without excellent credit. This could result in a substantial reduction in the rewards consumers love, ultimately leading to decreased consumer spending and negatively impacting the economy.

Trump’s call for a 10% cap on credit card interest rates also aligns with earlier warnings regarding its potential impact on the access of many American consumers to credit cards and its possible repercussions on small businesses.

Trump’s Interest Rate Cap Proposal

On January 20th, Trump proposed a 10% cap on credit card interest rates for one year to protect consumers from “being ripped off” by credit card issuers charging interest rates exceeding 20% for some borrowers. Furthermore, the President’s proposal follows a bill introduced last year by Senators Bernie Sanders and Josh Hawley, which aimed to cap credit card Annual Percentage Rates (APRs) at 10%.

Experts’ Take on the Proposed Interest Rate Cap

Richard Hunt, Executive Chairman of the Electronic Payments Coalition (EPC), revealed that EPC’s analysis of a 10% credit card cap indicated that almost all credit card accounts linked to a credit score below 740 would be closed or severely restricted with the implementation of a 10% interest rate cap.

This could affect 175 million to 190 million American cardholders, primarily lower- and middle-income households. Schulz points out that the specifics of how this cap would play out are still unclear, but he believes that the 0% balance transfer credit card offers would disappear if the cap was implemented.

Despite the potential access limitations to credit and dramatic reduction in rewards, politicians continue to propose these caps due to their popularity. A 2024 LendingTree survey revealed that three out of four credit card holders support these caps.