Trump Announces 10% Federal Cap on Credit Card Interest, Effective Jan 2026
This would be a seismic shift in consumer finance, moving rates from today's typical 20-30% APR down to a hard 10% cap.
The Potential Upside: A Consumer Liquidity Boom
With over $1.3T in credit card debt, capping interest would redirect billions annually from bank profits to household budgets. This surge in disposable income could fuel higher consumer spending, boost economic growth, and lift risk appetite—conditions that have historically benefited both stocks and crypto assets.
The Major Risk: A Credit Crunch
The core risk is bank retaliation. Faced with a collapsed profit center, lenders would likely:
• Sharply tighten credit standards, rejecting more applicants.
• Cut credit limits across the board.
• Reduce rewards and introduce new fees.
This contraction in available credit could stifle borrowing, slow spending, and trigger a risk-off sentiment in markets.
The Bottom Line
The policy sets up a direct transfer from financial institutions to consumers. The net effect hinges on one question: Will the boost to consumer spending power outweigh the drag of reduced credit access?
If credit remains broadly available, expect a market tailwind. If banks severely tighten, prepare for economic headwinds. The final outcome rests entirely on the implementation details and the financial sector's response.
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