Lately, credit card companies have been making bold moves—raising APRs, introducing bigger sign-up bonuses, and rolling out increasingly generous perks. While some of this can be chalked up to inflation or competitive pressures, there’s a growing theory that these changes are being driven by something more political: former President Donald Trump’s proposed cap on credit card APRs at 10%.
The bill hasn’t passed Congress yet, but it’s already creating waves in the financial world. And it’s possible that the credit card industry is strategically repositioning to stay ahead of potential regulations—by raising rates now and pushing consumers toward premium, annual-fee cards that may not fall under the same regulatory scrutiny.
Here’s what you need to know.
What’s the Trump 10% APR Cap Proposal?
In May 2024, Donald Trump introduced a proposal to cap credit card APRs at 10%. The move was positioned as a way to protect American consumers from high-interest debt—especially in an environment where balances are growing and households are struggling to keep up with inflation.
Supporters of the bill argue that a 10% cap would save Americans billions in interest payments. Detractors, including many banks and financial institutions, warn that the cap would severely limit access to credit—especially for those with lower credit scores.
Even though the bill hasn’t passed, its potential is already influencing how credit card issuers behave.
Why Card Issuers Are Raising APRs and Sweetening Perks Now
Even the possibility of sweeping legislation can shift market behavior. Here’s how card companies appear to be responding:
1. Maximizing Profit While They Still Can
Banks may be accelerating interest rate increases across portfolios in anticipation of a future cap. Many new credit cards are now launching with APRs of 25%–30% or higher, even for borrowers with solid credit. By locking in higher rates now, issuers may be trying to generate as much interest income as possible before any restrictions take effect.
2. Pushing Annual Fee Cards as a Potential Loophole
Here’s a more strategic possibility: Credit card companies may be shifting users toward premium, annual-fee cards that could be exempt from the proposed APR cap.
The logic? If the 10% cap is intended to protect low- and middle-income Americans, regulators may focus on mass-market or loyalty-focused no-annual-fee cards that are accessible to a broader, more vulnerable demographic.
By contrast, “valuable” cards with annual fees—the kind offering luxury travel perks, concierge access, or high-tier rewards—are positioned as elective products for higher-income users. These cards could be seen as outside the scope of consumer protection laws aimed at affordability and financial safety nets.
Issuers may be betting that a $550-annual-fee card with a 25% APR won’t draw as much regulatory attention as a no-fee card marketed to everyday consumers.
And we’re already seeing this play out:
- More premium cards with added benefits and higher fees
- Welcome bonuses topping 100K points to make the upfront cost feel worth it
- Mid-tier cards expanding perks to justify new or increased annual fees
It’s a possible attempt to “regulate-proof” their portfolios by shifting focus to higher-value, fee-based products that are less likely to be capped.
What Would a 10% APR Cap Actually Do?
If the Trump proposal—or a variation of it—were passed into law, here’s how it could affect consumers and issuers alike:
Big Savings for Revolvers
For people who carry a balance, the difference would be massive. On a $6,000 balance, a drop from 26% APR to 10% would save around $960 annually in interest.
Limited Access to Credit
With less revenue from interest, banks may cut back on approvals—especially for borrowers with fair or poor credit. Starter cards, student cards, and unsecured subprime options may dry up.
Weakened Rewards Programs
Card rewards are funded in part by interest income. If profit margins tighten, cash back, points, and lifestyle perks could be scaled back, particularly on no-fee cards.
Exemptions for Premium Cards?
There’s a chance that high-end cards with annual fees could be carved out of the cap, as they’re considered “voluntary” or “luxury” products. If that happens, rewards may survive—but only behind a paywall.
What Should You Do as a Consumer?
With these changes in motion, here’s how you can stay ahead of the curve:
Lock in Low-APR Cards Now
Intro APR offers and low fixed-rate cards are still available—but they may not be around forever.
Weigh the Value of Annual Fee Cards
With issuers shifting their strategy, premium cards are getting more attractive. But don’t be swayed by flashy bonuses alone. Make sure the long-term value justifies the fee.
Watch for Sneaky APR Increases
Your current card’s APR can change. Monitor your statements for rate increases and consider a balance transfer if you’re stuck with a high one.
Build Your Credit Score
If lending tightens, high scores will give you a competitive edge. Pay on time, keep balances low, and aim for 720+.
Final Thoughts: A Strategic Shift Before the Storm?
Whether or not the Trump-backed 10% APR cap becomes law, the credit card industry is clearly reacting. Issuers are raising rates, beefing up perks, and encouraging a migration toward premium cards—possibly as a safeguard against future regulation.
While this might mean more rewards in the short term, it could signal a long-term shift toward pay-to-play credit card models, where the best benefits are locked behind annual fees and APRs that escape government oversight.
As always, The Cards Guy will be watching. Until then, enjoy the perks, play smart with your balances, and keep your financial health front and center.
