WASHINGTON — With Tuesday the deadline for card issuers to comply with President Trump’s call for a 10% cap on credit card APRs, the Trump administration is floating a proposal for a new credit card product dubbed a “Trump card” as it seeks an alternative to the proposal.
The proposed cap has drawn sharp criticism from the financial services industry. There has also been no guidance provided to date, and an administration spokesperson said the 10% cap is an “expectation” of Trump’s.
President Donald Trump last week urged a 10% cap on credit card rates in a post on his Truth Social platform, saying the limit should take effect Jan. 20, the first anniversary of his second inauguration (see separate reporting in The CU Daily).
According to Fox Business, administration officials now say discussions with major banks have included the possibility of voluntarily offering new credit cards aimed at expanding access to credit without imposing a mandatory rate cap.
‘Great Idea’
National Economic Council Director Kevin Hassett said on FOX Business Network’s “Mornings with Maria” that conversations with large financial institutions have focused on creating a new type of card for consumers who lack access to traditional credit but have sufficient income and financial stability.
“We’ve been in conversations with the big banks, with CEOs of many of the big banks, who think that the president’s on to something — that he’s got a great idea,” Hassett said.
He added that banks could voluntarily extend credit to consumers who fall into what he described as a “sweet spot” — borrowers who are creditworthy but currently underserved.
Hassett said the administration expects the proposed “Trump card” to be offered voluntarily by banks, potentially avoiding the need for legislation.
‘Won’t Require Legislation’
“Our expectation is that it won’t necessarily require legislation, because there will be really great new ‘Trump cards’ presented for folks that are voluntarily provided by the banks,” he said.
Fox Business reported it reached out to several financial institutions for comment on the proposal.
As The CU Daily has reported, critics, including credit unions, have warned that imposing such a cap would lead to widespread credit card cancellations or sharp reductions in credit limits.
What One Analysis Found
The Electronic Payments Coalition, which represents payment networks and financial institutions, said its analysis found that between 82% and 88% of credit card holders would either lose their cards or see their credit limits significantly reduced under a 10% cap.
The group said low- and moderate-income consumers would be most affected, according to Fox Business.
According to the coalition, nearly all credit card accounts tied to credit scores below 740 would be closed or severely restricted if the cap were implemented, potentially affecting an estimated 175 million to 190 million cardholders.
Scant Details
Fox Business further reported administration officials have not detailed how a “Trump card” would be structured, priced or regulated, but have framed the concept as a market-based alternative to a statutory interest rate cap.
