Trump’s Plan to Cap Credit Card Interest Could Backfire, UBS Says

President Donald Trump’s idea to cap credit card interest could have far-reaching unintended consequences, UBS said on Monday.
On Friday, Trump posted on Truth Social that he was calling for a one-year, 10% rate cap for credit card interest, stating that the industry has been taking advantage of consumers.
The idea sparked a sell-off in major financial stocks on Monday, including Capital One, Synchrony Financial, JPMorgan, and Citigroup.
While investors reacted to the latest threat to lenders’ bottom line, UBS said that Trump’s plan would have a negative impact on Main Street despite its intention to relieve high borrowing costs for many Americans.
UBS analyst Erika Najarian said that the proposed credit card rate cap would likely backfire, as it would likely reduce consumer spending and curtail lending to certain borrower groups.
Najarian said that credit card providers are more likely to dial back the availability of credit to certain borrowers, rather than simply offer cheaper credit.