President Donald Trump’s proposed cap on credit card interest rates at 10% is facing pushback from leading economists and even leaders within the Republican Party.

Leaders Warn Against ‘Negative Secondary Effects’

House Speaker Mike Johnson (R-La.) said during a press conference on Thursday that the House “ought to think about and investigate” Trump’s proposal, emphasizing the need to be “careful” with such policies, since the “zeal to bring down costs” could lead to “negative secondary effects.”

Johnson also said that Trump and other leaders supporting this proposal “probably had not thought through” the fact that credit card companies might stop lending.

Rep. Rich McCormick (R-Ga.) held similar concerns, noting that anytime the government steps in, with either “price controls investments in businesses,” it usually results in “unintended consequences,” according to a report by The Hill.

A member of the far-right House Freedom Caucus, Rep. Eric Burlison (R-Mo.) said, “As long as people are competing, they have a natural instinct to keep their interest rates as low as possible in order to get the creditors.”

Burlison added that the government should be focused on making sure there is a “healthy, robust” and “free market,” to ensure such competitive dynamics remain in place.

It’s A ‘Subsidy’ For The Rich At The Expense of The Poor

Economist Justin Wolfers slammed Trump’s proposal, calling it a “form of populism which actually does harm to working Americans,” during his appearance on CNN’s One World on Thursday. Wolfers also said that the “president is a master of misdirection.”

According to Wolfers, the cap is likely to harm lower- and middle-income Americans. “If you have a poor credit score, banks won't be able to charge you more than 10%, so they just won't lend to you,” he said.

He also said that the proposal was essentially a “subsidy” for the rich and those with good credit scores, at the expense of the poor. Wolfers added that this was because “poor credit card holders have been subsidized throughout history by rich credit card holders through this form of redistribution.”

Earlier this week, Economist Peter Schiff echoed similar views, calling Trump’s proposal “unconstitutional” and the same kind of “socialist price control” that Trump had criticized former Vice President Kamala Harris for while on the campaign trail in 2024.

Schiff also warned that it will “force lenders to cut credit limits and close accounts for higher-risk borrowers,” essentially depriving them of credit.

According to the Competitive Enterprise Institute, a libertarian think tank, as banks begin pulling back from such high-risk borrowers, those who still need credit will start turning to “payday lenders or black markets.”

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