Late on Friday, 9 Jan. US President Donald Trump posted a social media message saying banks would have to cap credit card interest rates at 10%. Writing on Truth Social, he said the cap would be effective from 20 Jan., to mark his first year of this administration.
In morning trading on 12 Jan., the first day markets opened after the announcement, the share prices of US credit issuers, Capital One, American Express, Synchrony Financial and Citigroup fell by an average of 6.7%, while shares in JPMorgan Chase and Bank of America fell by about 2%.
Trump’s post is just that – a message on a social media platform. It would need to be turned into a formal legislative proposal and approved by a majority in both the US Congress and Senate before becoming law and experts told the Compass it would not happen by 20 Jan.
But the strong market reaction reflects that the proposal has bi-partisan support. In 2025, Republican congresswoman Anna Paulina Luna and Democrat representative Alexandria Ocasio-Cortez tabled a proposal to cap credit card interest rates at 10%.
Potential impact
It remains to be seen when, or how, such a proposal would be implemented yet the banking industry has already reacted.
“Evidence shows that a 10% interest rate cap would reduce credit availability and be devastating for millions of American families and small business owners who rely on and value their credit cards, the very consumers this proposal intends to help,” said the Bank Policy Institute, a US-based banking think tank, in a 9 Jan written response.
Of course, one would expect a banking lobby group to be against the proposal, but Cayman-based economist Julian Morris agrees.
“When the government sets a ceiling on the price of something, less of that thing gets made and sold. Think about what happened in Venezuela when the government set maximum prices on such everyday items as milk and bread: the shelves at supermarkets quickly became bare of those items,” said Morris.
The announcement and subsequent market reaction could alarm some of the undisclosed number of Cayman residents that hold US credit cards. Yet Morris believes most should be unaffected.
“It seems unlikely that many Cayman residents who have a US card would have their card withdrawn or an application for a new card denied if such a cap were imposed,” said Morris.
“Mainly it would hit folks with revolving credit – those who don’t pay off their cards every month – which I assume would be a minimal proportion of folks living in Cayman who are able to access a US card by having an address in the U.S.”
Just to clarify none of these changes would directly influence Cayman-issued cards that are denominated in US dollars. “For Cayman residents hoping to cash in [on the 10% cap] don’t get your hopes up,” said Amy Hubble, founder of Radix Financial. “If your credit card is issued by a Cayman bank, it won’t qualify, even though it’s a USD card.”
The Compass reached out to various local banks for this story but at the time of publication they had either declined to comment or not responded.