Wall Street is skeptical of Trump’s proposed rate cap on credit cards

US President Donald Trump’s proposal to cap credit card interest rates at 10% has made headlines but would require legislation and is unlikely to pass, Wall Street analysts said.Credit cards are a cornerstone of U.S. consumer finance, offering households flexible access to credit, but often at high rates that can make carrying funds expensive. For banks and card issuers, these high rates and associated costs are an important source of profit.

Washington has been divided for years over whether interest rate caps would help consumers or limit access to credit.Trump called for a one-year cap on credit card interest rates at 10% starting Jan. 20 on Friday, without providing details on how his plan will come to fruition or how he plans to bring companies into compliance.

“While this represents an escalation of key risks for credit card issuers, we believe that a cap on card rates can only be done by Congress, and not by executive order,” TD Cowen analysts wrote in a note.

“We believe there is little chance that a cap will be passed into law at the federal level, similar to previous attempts to implement a broad national rate cap,” the broker said.

Affordability has become a central political issue in the run-up to the US midterm elections, with voters increasingly focused on the cost of daily necessities. The average credit card interest rate is currently about 19.65% in the US, according to financial services firm Bankrate.

Millions of Americans carry credit card balances every month, with lower-income households more likely to rely on cards for daily expenses and face higher interest rates.

High interest rates mean credit card balances can grow quickly if consumers don’t pay them off every month.

“In our view, the president has limited ability to implement this unilaterally,” Barclays analysts said, adding that similar measures have previously failed to gain traction in the Senate and House of Representatives.