Capping credit card interest rates at 10% polls incredibly well. APRs above 25% feel abusive, especially after years of inflation where households are already stretched thin. On the surface, it looks like populism finally taking on Wall Street.

A unilateral federal cap would not rein in banks. It would mathematically eliminate the subprime credit market almost overnight. Funding costs plus expected credit losses already exceed 10% for subprime borrowers. That means insolvency by design, not by accident.

This is not theoretical. Lenders like Synchrony and Bread do not just finance consumers. They quietly subsidize retail. Macy’s, Nordstrom, and dozens of other chains depend on credit card profit sharing to stay afloat. Remove those economics and you do not get cheaper credit. You get empty malls and more store closures.

The legal path is even shakier. To impose this through executive action, the White House would have to stretch emergency authorities well past their limits. The National Emergencies Act. The Defense Production Act. Even the Trading with the Enemy Act. Any route invites a direct constitutional fight in a court system that has grown openly skeptical of executive overreach.

If traditional credit cards become unworkable, capital does not retreat. It flows into BNPL products, pawn lending, rent to own schemes, and regulatory gray zones. History is clear here. Arkansas in the 1980s. The Marquette decision. Interest caps do not create fairness. They create scarcity.

It is fewer credit options, fewer retailers, higher costs in disguise, and the people this policy is meant to help pushed out of the formal financial system altogether.

Good politics. Bad math. Predictable outcome.

That is how well intentioned policy turns into economic damage very quickly.