The Electronic Payments Coalition estimates that 190 million Americans, roughly 80% of current cardholders, would risk losing credit access under a 10% APR ceiling. That number has been floating around since January, and almost nobody is engaging with what it actually means. I think the cap is bad policy, not because high interest rates are acceptable, but because removing them by fiat would trigger the kind of credit contraction that makes a debt crisis worse, not better.
The Spread That Pays for the Risk
Credit card lending is unsecured. No house, no car, no collateral. Lenders price that risk into the rate. The average APR sits near 22% because charge-off rates on credit cards have historically run between 3% and 4%, and the current delinquency environment is the worst in 13 years. Strip the rate to 10%, and the math collapses. An issuer funding at the current fed funds rate of roughly 4.3% and charging 10% has less than 6 points of spread to cover losses, servicing, fraud, and rewards. That is not a business. That is a wind-down.
JPMorgan's CFO Jeremy Barnum said it plainly on the January earnings call: a 10% cap would cause people to "lose access to credit on a very, very extensive and broad basis, especially the people who need it the most." You can dismiss that as bank self-interest. But run the numbers yourself. A borrower carrying $6,000 at 22% generates about $1,320 a year in interest. At 10%, it is $600. If that borrower has a 10% probability of default, the expected annual loss alone is $600, which consumes the entire interest stream before a single dollar goes to servicing costs.
Senator Warren says the average cardholder with a balance would save about $900 a year. That is true in a static world where everything else holds constant. It is also the kind of partial-equilibrium thinking that makes for good press releases and terrible policy.
Who Actually Gets Cut
The 111 million Americans carrying balances month to month are not a monolith. Some are prime borrowers who could absorb a rate reduction because lenders would still profit on them. Many are not. The subprime and near-prime borrowers with FICO scores below 670, the ones paying the highest rates, are precisely the customers issuers would shed first under a cap. Banks do not ration credit evenly. They ration it by risk.
Phil Kerpen's warning that a 10% ceiling "could tip the economy into recession" is probably overstated. I will grant the pro-cap side that the banking lobby has a long history of catastrophizing regulation. But the directional point stands: when you make it illegal to price risk accurately, the risk does not disappear. It migrates. It moves to payday lenders, buy-now-pay-later products, and informal borrowing channels that carry no disclosure requirements at all.
State-level efforts pegging caps at 36%, modeled on the Military Lending Act, are a more honest intervention. They target the true outliers without making mainstream unsecured lending uneconomic. Iowa and West Virginia are already moving on this. The distance between 36% and 10% is not a negotiating range. It is the difference between trimming predatory margins and eliminating the product.
Trump posted the idea on Truth Social in January and set a January 20 compliance deadline that came and went without action. Jennifer Zhang of Protect Borrowers calculates that Americans are accruing $368 million per day in extra interest relative to a 10% world. That figure is real. It is also meaningless without the counterfactual: how many of those borrowers would have no credit line at all?
Congress should push hard on fee transparency, enforce the CFPB's late-fee findings showing $17 billion in annual charges, and let the Credit Card Competition Act create genuine routing competition that pressures margins organically. Those are structural changes. A 10% cap is a slogan with a compliance deadline that its own author could not meet. The $368 million daily interest figure gets the headline. The 190 million who could lose their cards does not. One of those numbers should keep you up at night, and it is not the one the populists are quoting.
