MW Trump's cap for credit-card interest rates wouldn't pass Congress, analyst says

By Victor Reklaitis

Sen. Josh Hawley and Sen. Bernie Sanders have both pushed for similar caps in the past, without success

Republican presidential nominee Donald Trump on Wednesday promised to cap interest rates for credit cards, but a veteran analyst predicts the plan wouldn't get the congressional approval that it needs to become reality.

"I don't see a path for that in Congress," Ian Katz, an analyst covering financial companies IYG for research and forecasting firm Capital Alpha Partners, said in an email to MarketWatch.

In a campaign speech Wednesday in Uniondale, N.Y., Trump said: "While working Americans catch up, we're going to put a temporary cap on credit-card interest rates. We're going to cap it at around 10%. We can't let them make 25% and 30%." The former president didn't elaborate on the pledge, but instead switched to criticizing concerns about climate change.

Trump's idea is similar to measures proposed in the past by members of Congress such as GOP Sen. Josh Hawley of Missouri and Sen. Bernie Sanders of Vermont, an independent who usually votes with Democrats. Those measures haven't found sufficient traction to become law.

Hawley's bill calling for a cap of 18% last year sparked skepticism, with analysts at TD Cowen Washington Research Group saying at that time that they did "not see a path for it to pass either the Senate or the House given what it could mean for credit availability." In other words, the analysts were suggesting that providers of credit cards would serve fewer customers if a cap took effect.

Capital Alpha's Katz on Thursday echoed that point on the likely response by credit-card companies, saying: "Presumably card companies would restrict who they give cards to."

Now read: Trump proposes credit-card interest caps, but smart money still views him as bank-friendly

-Victor Reklaitis

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September 19, 2024 16:01 ET (20:01 GMT)

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