Interest rate cap a price control by another name

This month, President Donald Trump announced that he backs a proposal to impose a temporary (read: permanent) 10% ceiling on credit card interest rates. The legislation is supposed to help working families struggling with current economic trends. White House support is intended to deflect criticism from Democrats about "affordability."

Sens. Warren of Massachusetts and Sanders of Vermont have long embraced such regulations. The latter, along with Sen. Josh Hawley, R-Mo., introduced a bill in 2025 to mandate lower interest rates for credit cards. But the legislation has stalled — and for good reason.

Trump has apparently forgotten that, during the 2024 campaign, he repeatedly slammed his Democratic opponent, Kamala Harris, for embracing price controls, which he called a "Soviet-style" approach. Yet arbitrarily limiting credit card interest rates is a price control — in this case, a control on the cost of money. And price controls inevitably result in shortages — in this case, a shortage of credit availability.

Interest rates are a tool for pricing risk. A 10% limit would probably force lenders to reconsider the wisdom of loaning money to all but the most credit-worthy borrowers, potentially leaving millions of Americans with fewer options inside traditional financial institutions. While some observers may applaud this as a means of forcing people to wean themselves off their reliance on living beyond their means, reducing credit access would have potentially devastating effects for the purchasing power of working Americans.

This proposal would hit Nevada particularly hard, given its reliance on tourism. Airlines and the hospitality industry rely heavily on the use of credit cards and reward programs, which could dry up as a result of a punitive interest cap.

"People will lose access to credit," Jeremy Barnum, CFO at JPMorgan Chase, told NBC News, "like on a very, very extensive and broad basis, especially the people who need it the most, ironically."

More moderate Democrats understand the downsides and have been reluctant to support the Hawley-Sanders legislation. But perhaps a compromise is on the horizon.

Last week, Barnum's boss, JPMorgan Chase CEO Jamie Dimon, suggested that the government run a test program, capping credit card interest rates only in Massachusetts and Vermont, the home states of Sens. Warren and Sanders respectively. "It would be an economic disaster," Dimon said. "In the worst case, you'd have a drastic reduction of the credit card business" for 80% of Americans.

Notably, neither Warren or Sanders has rushed to accept the offer.

(COMMENT, BELOW)