Trump's 10% Credit Card Interest Rate Cap Proposal and Its Impact on Synchrony Financial

The political landscape of financial regulation in the United States has been reshaped by former President Donald Trump's proposed 10% cap on credit card interest rates, set to take effect on January 20, 2026. This one-year cap, a key campaign promise from his 2024 run, aims to alleviate the burden of high-interest debt on consumers, particularly as credit card balances reached a record $1.17 trillion in Q3 2024. However, the proposal's enforcement mechanism remains ambiguous, with critics arguing that Trump lacks unilateral authority to implement such a sweeping policy without congressional approval. For credit card issuers like Synchrony Financial, the cap introduces significant political risk and raises urgent questions about long-term profitability.

Political Risk: Enforcement Uncertainty and Industry Backlash

Trump's proposal has sparked immediate opposition from the banking sector. The American Bankers Association warns that a 10% cap could reduce credit availability, particularly for lower-risk borrowers, and drive consumers toward less regulated alternatives like payday loans. This aligns with broader industry concerns that interest rate caps distort risk-based pricing models, potentially destabilizing lending ecosystems.

Legislatively, the path is equally uncertain. While bipartisan legislation-such as the 10 Percent Credit Card Interest Rate Cap Act introduced by Senators Bernie Sanders and Josh Hawley-seeks to codify the cap permanently, it has stalled in Congress. Trump's administration, meanwhile, has historically sought to weaken the Consumer Financial Protection Bureau, the agency that could enforce such a policy. Legal challenges to dismantling the CFPB remain unresolved, leaving enforcement in limbo. This ambiguity suggests the cap may function more as a political pressure tactic than a binding regulation, yet its mere announcement has already triggered market volatility.

Synchrony Financial: Exposure and Adaptive Strategies

Synchrony Financial, a leading private-label credit card issuer, faces acute exposure to the proposed cap. In Q3 2025, the company reported net interest income of $4.7 billion, a 2% increase year-over-year. While exact interest revenue as a percentage of total revenue remains unspecified in 2025 filings, historical data indicates that interest income typically constitutes a substantial portion of its revenue stream. A 10% cap would directly compress Synchrony's profit margins, forcing the company to recalibrate its business model.

The market has already reacted: Synchrony's stock plummeted 8% following Trump's announcement, reflecting investor concerns over profitability erosion. To mitigate this, Synchrony has pursued adaptive strategies, including diversifying into fee-based income and tightening credit standards. For instance, its acquisition of Ally Lending in 2024 expanded its footprint in home improvement and healthcare financing, sectors less reliant on interest income. Additionally, the company has prioritized digital transformation and AI-driven automation to enhance operational efficiency.

Fitch Ratings' recent upgrade of Synchrony to 'BBB' with a stable outlook underscores its capacity to navigate regulatory headwinds. However, the firm's reliance on interest revenue remains a vulnerability. If the cap becomes permanent, Synchrony may need to further shift toward non-interest income, such as merchant fees or subscription-based services, to sustain profitability.

Long-Term Profitability and Systemic Implications

For credit card issuers broadly, the 10% cap represents a paradigm shift. While proponents argue it could save consumers $100 billion annually, critics warn of unintended consequences, including reduced credit availability and a potential credit crunch. Synchrony's robust net margin and Piotroski F-Score of 8 suggest it is well-positioned, but smaller issuers with thinner margins may struggle.

The long-term viability of the cap hinges on enforcement clarity. If implemented through legislation, issuers will need to accelerate diversification strategies. If it remains a symbolic threat, the industry may face prolonged uncertainty, complicating capital planning and risk management. For investors, Synchrony's proactive approach to innovation and its strong credit profile offer some reassurance, but the political and regulatory risks remain elevated.

Conclusion

Trump's 10% credit card interest rate cap proposal underscores the tension between consumer protection and financial sector stability. For Synchrony Financial, the cap poses immediate political risk and challenges to long-term profitability, particularly if interest income is curtailed. While the company's adaptive strategies and financial strength provide a buffer, the lack of clear enforcement mechanisms and legislative support leaves the future uncertain. Investors must weigh Synchrony's resilience against the broader regulatory and economic volatility that the proposal has ignited.