Trump urges Congress to cap credit card interest rates at 10%

President Donald Trump on Wednesday urged US lawmakers to pass legislation to limit credit card interest rates to 10%, following his social media post this month ordering banks to voluntarily lower interest rates.

“I am asking Congress to cap interest rates on credit cards at 10% for one year, and this will help millions of Americans save to buy a home,” Trump said during the World Economic Forum in Davos, Switzerland.

“They are charging Americans interest rates of 28%, 30%, 31%, 32%,” Trump said. “What happened to usury?”

Bank stocks rose after these comments. the KBW Bank Index It rose 2.2% in morning trading. Capital OneWhich relies on cards for most of its revenue, it advanced 1.9%.

Of the options the Trump administration had to pressure US banks over card interest rates, the legislative route may be the least threatening to the industry. Sen. Josh Hawley, R-Mo., and Sen. Bernie Sanders, R-Va., introduced a bill last year that would cap the card’s APR at 10% for five years, but that proposal has stalled in Congress.

Analysts, including KBW’s Sanjay Sakrani, said the card bill was unlikely to gain enough bipartisan support to become law. Lawmakers from Trump’s Republican Party, including House Speaker Mike Johnson, have expressed caution when it comes to ticket price controls.

“If this is the path, the chances of implementation are low,” Al-Sakrani said in an interview. “There is a lot of Republican leadership that opposes the idea” and other industries, including airlines and retailers, would be hurt by the policy.

It is unclear whether pressure from Trump – who has great influence among GOP lawmakers – will improve the plan’s chances of passing.

The episode may show the limits of Trump’s ability to convince the financial industry to voluntarily give up billions of dollars in revenue to support his election-year affordability efforts.

After Trump’s Truth Social post on January 9 about the interest rate cap, banks said on earnings conference calls that such a cap would have unintended consequences, including that lenders would simply cancel the accounts of many card customers, especially those with lower credit scores.

The president told reporters that lenders who did not abide by interest rates would be “breaking the law,” but behind closed doors, bankers responded that they were already abiding by the law.

Privately, bankers and their lobbyists told CNBC they hoped to block the president’s request, given the difficulty of passing the legislation.

Several major credit card lenders contacted by CNBC on Tuesday said they had not made any changes to interest rates, but they all declined to be identified. KBW’s Sakhrani said he was not aware of any major card player who had reduced their prices.

Wednesday, JPMorgan Chase CEO Jamie Dimon told the Davos audience that the US government should test interest rate caps in just two states, Vermont and Massachusetts. These are the states where Sanders and Democratic Senator Elizabeth Warren, who supported capping interest rates, belong.

Doing so would teach a “real lesson” to those who support price controls, Dimon said.

“It would be an economic disaster,” Dimon said. “In the worst case scenario, you’ll have a significant decline in credit card business” for 80% of Americans, he said.