How a New Administration Could Reshape the Credit Card Business

Auriemma Roundtables details what President Trump’s second inauguration could mean for the credit card industry.

In 2025, members of Auriemma Roundtables’ 13 different credit card-focused groups will be evaluating how a new administration’s regulatory actions could impact everything from credit card interest rates to and late fees to macro business structure.

Potential Mandated Changes to Interest Rates

Americans are carrying an increasing amount of credit card debt, totaling $1.17 trillion according to the Federal Reserve Bank of New York. This increase in household debt, and the role interest rates play in it, has caught the attention of two unlikely political allies: President Donald Trump and Senator Bernie Sanders of Vermont. Both have expressed support for capping credit card interest rates at or around 10%.

Capping interest rates could reduce the cost of borrowing for some consumers, but it might also make access to credit more difficult, particularly for subprime borrowers. Credit card companies, facing limits on the interest they can charge, may be less able to extend credit to riskier customers, leading to an increase in usage of costlier alternatives, such as payday lenders.

Other downstream impacts remain uncertain. Debt repayment best practices are to repay balances with the highest interest first. If interest rate caps lead to credit card debt taking a back seat to other, higher-interest credit lines, delinquencies may increase. To make up for overall lost revenue, credit card issuers could cut back on consumer rewards programs – like points and cash back – to make up the revenue shortfall.

Should Congress pass credit card rate caps, the move represents a departure from the last four years of credit card regulation, which have mostly been driven by the CFPB and have drawn court challenges, according to Auriemma Roundtables General Counsel Missy Meggision.

“An act of Congress is much less likely to get tied up in the courts than a directive from an agency like the CFPB,” Meggison said. “This is especially true in a post-Chevron Deference world.”

Possible Revival of the Credit Card Competition Act

On the legislative end, the new Congress could take up the Credit Card Competition Act (CCCA), which was first introduced in 2023 and enjoyed bipartisan support. Senators Peter Welch (D-VT), J.D. Vance (R-OH), Jack Reed (D-RI), and Josh Hawley (R-MO) co-sponsored the legislation, aimed at increasing competition in the credit card processing market, could challenge the dominance of major credit card networks – namely, Visa and MasterCard, which together control 80% of the interchange market – in the payment processing ecosystem. By mandating that merchants be given more choices in the networks they use to process credit card transactions, the act aims to lower interchange fees, commonly referred to as “swipe fees.”

Proponents of the legislation argue that it will reduce costs for merchants, particularly small businesses, and ultimately lower prices for consumers as savings are passed on. Opponents, however, caution that the act could disrupt the existing credit card ecosystem, lead to reduced rewards programs for consumers, and create technical challenges and increased costs for banks and merchants.

Last year, the CCCA, despite some bipartisan traction among legislators, faced significant opposition from financial institutions and credit card networks. Should the next Congress take up the bill again, its future depends on the evolving political landscape and lobbying efforts from various stakeholders.

The passage of the CCCA hinges on the balance between consumer protection advocacy and industry opposition. Alternatively, only certain provisions of the act might be adopted, providing limited benefits such as fee relief for small businesses while leaving the broader ecosystem unchanged. In the event the CCCA fails to gain enough support, the current system will likely persist, maintaining the status quo but potentially fueling increased calls for reform in the future.

The Downfall of Late Fee Caps

A Texas federal court recently blocked CFPB action on credit card late fees, after a protracted legal battle.

As part of its mandate to tackle so-called “junk fees,” the CFPB has focused on credit card late fees. The proposed regulation would have limited such fees to $8 for most late payment violations, significantly reducing ways issuers can offset risks and costs associated with late or non-payment. Had the rule taken effect, issuers would have had to look elsewhere to make up the revenue gap. Meanwhile, some banks have taken it upon themselves to curtail such fees, with at least one issuer turning to higher interest rates to make up for lost revenue.

Historically, borrowers with lower FICO scores are far more likely to incur late fees: A 2022 report by the Boston Federal Reserve found that 25% of borrowers with credit scores below 600 pay at least one credit card late fee annually. Limiting issuers’ ability to recover losses from these higher-risk borrowers could lead them to reduce exposure in other ways, such as lowering credit limits or scaling back lending to lower credit tiers.

With a new CFPB head taking charge after the inauguration, the Bureau is not expect to pursue the appeals process, according to Meggison

“The CFPB took on a more activist role over the past four years, issuing mandates and restrictions for financial institutions,” Meggison said. “We expect them to take a more interpretive stance going forward.”

About Auriemma Roundtables’ Credit Card Roundtables

From marketing operations to charge backs and collections, Auriemma Roundtables’ 13 credit card groups cover nearly every angle of the industry. As the industry faces potential regulatory shifts under a new administration, staying informed and prepared is more critical than ever. Auriemma Roundtables provide industry leaders with the insights, expertise, and collaborative support needed to navigate these changes effectively.

To join the conversation and gain access to unparalleled resources, expert analysis, and peer collaboration, contact Tami Corsi.