Trump Targets Card Swipe Fees After Lambasting Interest Rates

President Donald Trump has shifted focus from credit card interest rates to the interchange fees paid by merchants for card transactions. In a recent Truth Social post, Trump endorsed the Credit Card Competition Act, a bipartisan bill aimed at reducing swipe fees and increasing competition among payment networks. This move is part of his broader campaign to address consumer affordability concerns ahead of the November midterm elections.

The Credit Card Competition Act seeks to allow retailers to bypass major networks like Visa and Mastercard. The legislation has drawn support from major retailers who argue that US swipe fees are higher than in other countries. However, it faces resistance from lawmakers aligned with financial institutions.

Trump also reiterated his call for a 10% cap on credit card interest rates, citing high rates as a ripoff for consumers. He indicated this cap should take effect on January 20, 2026, but did not clarify how it would be implemented.

Why Did This Happen?

Credit card companies have faced increasing scrutiny over high interest rates and fees. The Trump administration has previously rolled back consumer protections, including rejecting late fee caps under the previous administration. Trump’s recent focus on affordability aligns with broader political pressures ahead of the midterms.

The average credit card interest rate is currently around 19.65%, with some store cards charging rates over 30%. Critics argue that high rates disproportionately affect subprime borrowers and could lead to reduced credit access.

How Did Markets React?

Visa and Mastercard shares fell over 5% on Tuesday following Trump’s endorsement of the Credit Card Competition Act. This followed Monday’s selloff after Trump announced the 10% interest rate cap.

The market’s reaction highlights investor concerns about potential revenue impacts for payment processors and their banking partners. JPMorgan Chase & Co. warned that the cap could significantly alter its business model and harm customer access to credit.

What Are Analysts Watching Next?

Analysts remain cautious about the likelihood of passage for the Credit Card Competition Act. While the bill has bipartisan support, it has faced resistance from bank-aligned lawmakers.

TD Cowen analyst Jaret Seiberg noted that passage is unlikely but warned the issue could gain momentum if it attracts more Republican support.

Banking groups argue that a 10% interest rate cap would reduce credit availability and drive consumers toward less regulated alternatives like payday lenders. They also warn that this could hurt smaller banks and community lenders.

Consumer and Economic Impacts

Consumer advocates have welcomed the proposals, noting that credit card companies earned $130 billion in interest and fees in 2022. The Consumer Financial Protection Bureau reported that the average cardholder carries a balance of over $5,000.

A cap on interest rates could offer relief for subprime borrowers, who currently face high delinquency rates. However, researchers caution that such a policy could also reduce credit availability for high-risk borrowers.

The debate highlights broader tensions between consumer protection and financial institution profitability. While the Credit Card Competition Act could lower swipe fees for retailers, it could also disrupt the payment processing ecosystem.

Looking Ahead

The outcome of these proposals will depend on political dynamics in Congress. While the Credit Card Competition Act has bipartisan support, its passage remains uncertain.

Trump’s calls for a 10% interest rate cap are also unlikely to be implemented without congressional action.

The impact on consumers and the broader economy will hinge on whether these proposals gain enough support to become law. For now, the debate continues as lawmakers and financial institutions weigh the costs and benefits of reform.