Americans across all income levels are struggling to finance their credit card debt, leading to higher delinquency rates.

With consumers being squeezed due to higher prices and soaring credit card debt, affordability is taking center stage yet again.

In an attempt to address this issue, President Donald Trump recently proposed a 10% cap on credit card interest rates for 1 year, starting January 20.

While this may be beneficial, especially to individuals who hold high levels of credit card debt, critics argue that the proposal could result in fewer people qualifying for credit cards, leading them to look for riskier and more expensive financing options.

Moreover, banks and other financial institutions that issue credit cards stand to lose a lot because this would put a dent on their returns.

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The U.S. economy is sitting on a massive pile of debt, and as of the third quarter of 2025, household debt has reached $18.5 trillion.

And while it may be reasonable to assume that the bulk of this debt is held by middle- and lower-income households, high-income earners are feeling the squeeze as well. Those making $150,000 or more are falling behind on their credit card and auto loan bills as well.

According to data from VantageScore, credit card delinquencies among individuals earning over $150,000 have soared 18% over the last two years. Meanwhile, delinquencies among those making $45,000 to $150,000 have risen 9.7%. 

With delinquencies soaring across multiple income brackets amid rising prices due to inflation and tariffs, the issue of affordability is taking center stage yet again.

In response to this, President Donald Trump called for a 10% cap on credit card interest rates for 1 year, starting January 20. If the motion goes through, it would mark a steep cut to current rates charged by credit card companies. Since 1994 the average interest rate on credit cards is 22%. Rates have never fallen below 10% before.

This isn’t the first time Trump has proposed such a measure. The President  initially pitched this idea during the 2024 presidential campaign to ease debt servicing for Americans who have high levels of debt. 

Meanwhile, the Biden administration attempted to push a similar initiative, proposing to put an $8 cap on late fees. However, this was struck down by a federal judge.

Stocks of several banks and financial firms fell upon the announcement of President Trump’s latest initiative.

Shares of Capital One (COF) and Synchrony Financial (SYF) fell over 6%. Meanwhile, American Express (AXP), JPMorgan Chase (JPM), and Citigroup (C)  shed 4%, 1%, and 3%, respectively. 

Visa (V) and Mastercard (MA) saw shares drop nearly 2%. Barclays, a UK-based bank, saw its stock fall 2% as well. The bank is a major issuer of credit cards in the U.S.

While a credit card interest cap could be immensely beneficial to debt holders, critics of the proposal argue that lower rates could result in fewer individuals qualifying for credit cards. This would then force them to turn to riskier and much more expensive financing options.

Some executives have also responded to the proposed interest cap.

JPMorgan Chase CFO Jeremy Barnum said that “people will lose access to credit on a very, very extensive and broad basis, especially the people who need it the most. And so, that’s a pretty severely negative consequence for consumers, and frankly, probably also a negative consequence for the economy.”  Barnum also admitted that it would have negative repercussions for his firm.

Citigroup CEO Jane Fraser echoed similar sentiments, stating that the proposal would have a severe impact on access to credit and consumer spending and would even dwarf the negative repercussions for the firm and other banks. 

These sentiments aren’t surprising given that credit card issuers stand to lose if the proposal pushes through. After all, these lenders collect large sums of interest on the $1.23 trillion outstanding balance on U.S. credit cards.

Financial institutions like JPMorgan Chase and American Express have enjoyed stable earnings over the past decade. A credit card interest cap could harm these institutions’ returns.

Uniform Accounting reveals just how much returns these firms have generated over the years.

Since 2015, JPMorgan Chase has generated an average return on equity (“ROE”) of 19%. Meanwhile, American Express has delivered an average ROE of 31%.