Who Benefits From Trump’s Proposed Credit Card Interest Cap? Vivian Tu Breaks It Down
Written by
Laura Bogart
Edited by
Kristen Mae
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For consumers paying down high-interest credit card debt, a recent proposal from the Trump administration — a one-year cap on credit card interest rates at 10% — sounds like much-needed relief.
So why are some experts skeptical of its long-term impact and its ability to pass in a Congress controlled by Trump’s party?
While Vivian Tu, founder and CEO of Your Rich BFF, can’t speak for members of Congress, she can explain who actually stands to benefit from Trump’s plan — and who might end up worse off. Spoiler alert: It’s not just the banks. In a recent video, Tu used some creative (and tasty) props to break it all down.
The Three Kinds of Credit Card Users
To illustrate how a 10% interest rate cap could affect different consumers, Tu stacked three snacks from her pantry as a visual metaphor for the three main types of credit card users:
- People who pay their balance in full and on time. At the top of the stack, represented by a snack pack of Oreos, this group avoids interest altogether — meaning a rate cap would have little to no impact on their finances.
- People carrying credit card debt but actively paying it down. A container of chili crisps stood in for borrowers on what Tu calls “a slow pay-down journey because the interest rates are so high.” This group could see meaningful relief from lower rates.
- People deep in debt and starting to miss payments. At the bottom of the stack was a jar of peanut butter and chocolate, representing the highest-risk borrowers — and, according to Tu, those potentially most vulnerable to unintended consequences if lenders pull back credit access.
Who Benefits Most From the Cap — and Who Doesn’t
After delineating the three kinds of credit card users, Tu noted that a 10% cap on interest wouldn’t meaningfully affect the first group, who already pay nothing in interest.
However, people in the second category could see what Tu called “a meaningful benefit” from lower rates because reduced interest could accelerate payoff. “I’m all for it. It’d be a huge benefit,” she said.
For credit card users in the third cohort, things get trickier. Tu described credit cards as “a lesser of two evils” for these users, who would otherwise resort to payday loans or other predatory sources of quick cash. And credit card companies factor this risk into high interest rates.
“Credit card companies need them to pay the higher interest rates to account for the fact that some of this population will eventually default on their debt — aka never pay it back,” she said. “If credit card companies can’t make up the losses through interest payments, they’ll likely just cancel the credit cards of millions of ‘less creditworthy’ borrowers.”
Unfortunately, that could force some of those borrowers toward loan sharks or payday loans — hardly ideal alternatives.
Pushback From the Banking Industry
While Tu suggested the Trump administration should run models to ensure the number of credit card users who benefit outweighs those who could be hurt, other financial and political figures have more settled opinions.
Beyond concerns about how consumers might be affected, some critics warn that a 10% interest rate cap could significantly cut into credit card issuers’ revenue.
Representatives from the banking industry have pushed back on the proposal, arguing that reduced interest income would likely lead lenders to limit access to credit — particularly for borrowers with lower credit scores.
Jeremy Barnum, the CFO of JPMorgan Chase, warned that a cap could have ripple effects across the economy, saying it would negatively affect consumers and the economy as a whole.
“Specifically, people will lose access to credit — on a very, very extensive and broad basis — especially the people who need it the most, ironically,” he said. “That’s a pretty severely negative consequence for consumers and, frankly, probably also a negative consequence for the economy as a whole right now.”
The American Bankers Association and other industry groups have echoed concerns that a cap would drive consumers toward alternatives that are less regulated and more costly.
That said, not all experts agree the impact on banks would be as severe as critics suggest. According to reporting from PBS News, researchers who studied the proposal found that Americans could save billions of dollars in interest each year — money that could potentially flow back into the broader economy.
“The same researchers found that while the credit card industry would take a major hit, it would still be profitable, although credit card rewards and other perks might be scaled back,” the report said.
Political Pushback — Including From Trump’s Own Party
Though Trump has largely enjoyed support from his party, this proposal represents a potential policy rift.
Per The Hill, House Speaker Mike Johnson (R-La.) told reporters that Trump and other supporters of the plan “probably had not thought through” the possibility that credit card companies might stop lending money — or set low caps on how much people can borrow.
Still, Trump’s plan has some surprising supporters, including Sen. Elizabeth Warren (D-Mass.), who encouraged Trump to fight aggressively for the proposal in a private phone call, as reported by The Hill.
Congressional approval is key because the president lacks the constitutional authority to regulate the business practices of private companies, such as setting interest rates. At this point, widespread congressional support is uncertain.
Broader Conversations Around Affordability
Trump’s announcement comes at a politically challenging time for the president and his party, especially as Americans report growing concerns about affordability.
In a piece about Trump’s efforts to tackle the affordability crisis — presumably ahead of the midterms — Tami Luhby, a senior writer for CNN, wrote that “experts have questioned whether his latest batch of ideas would really put a dent in the nation’s affordability crisis and help ease Americans’ struggles.”
When Luhby spoke with Andy Laperriere, head of U.S. policy research at Piper Sandler, he expressed concerns that the interest cap could make it harder for Americans with lower credit scores to obtain credit cards. He also compared Trump’s attempt to address affordability with former President Joe Biden’s, arguing that it focused on attacking industries for high prices and “proposing symbolic solutions.”
A Starting Point
Regardless of whether Trump’s credit card interest rate cap ever becomes law, experts like Tu say they are glad broader conversations about affordability are happening.
“I’m glad we’re starting to focus on consumer affordability,” she said. She ended her video by calling for thorough modeling and research to ensure that “a well-meaning decision doesn’t do more harm than good.”
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Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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