Billionaire CEOs and various banking organizations have expressed skepticism toward President Donald Trump’s recent proposal for a one-year 10% cap on credit card interest rates. However, SoFi CEO Anthony Noto sees potential in the cap, suggesting it could push consumers to consider personal loans as an alternative to credit cards.
In a post on X, Noto noted that should this cap be enacted—a substantial “if”—credit card lending could shrink significantly, as many issuers may struggle to remain profitable at such rates. He emphasized that consumers still require access to credit, which positions SoFi personal loans to fill the gap left by changing credit card dynamics. Noto also highlighted the importance of proper underwriting and borrower education in this scenario.
Trump’s proposal came through a Truth Social post where he declared that his administration would protect Americans from what he termed exorbitant credit card interest rates, which often exceed 20-30%. However, implementing this cap would necessitate congressional action, and as of now, further details remain unclear.
Reactions from the financial community have been mixed. Billionaire investor Bill Ackman initially criticized the move as a “mistake,” asserting that limiting credit card interest rates could result in millions losing access to credit cards entirely. In his follow-up comments, Ackman acknowledged the pursuit of lower rates as essential but cautioned that the proposed cap could push consumers toward predatory lending options.
The American Bankers Association and the Consumer Bankers Association also released a statement opposing the proposal, raising concerns that such a cap would redirect consumers to less regulated and more expensive alternatives for credit. They expressed a commitment to working with the administration to ensure that Americans retain access to necessary credit.
The debate surrounding the proposed interest rate cap is layered, with potential implications for consumer access to credit and the overall health of the lending industry. Amid these discussions, the evolving landscape of personal loans could offer a promising alternative for borrowers, enabling them to manage debt more effectively should credit card lending decline.