While Donald Trump’s 10% credit card rate cap is aimed at consumers, financial experts warn that it could devastatingly impact small businesses. Following Trump’s announcement on Truth Social that the cap would begin on January 20, industry groups pointed out that many small business owners rely on personal credit cards for funding.
The banking industry issued a joint statement warning that the cap would “reduce credit availability” for small business owners. They argued that if banks cannot price for risk, they will stop lending to entrepreneurs who often have fluctuating incomes. This could choke off a vital source of capital for the economy, leading to slower growth and fewer jobs.
Trump framed the policy as a way to stop the “ripping off” of the public, citing the record $1.17 trillion in debt. However, the unintended consequences for the business sector are significant. Investor Bill Ackman warned that the cap could lead to a credit crunch, with banks canceling cards to avoid losses.
Senator Elizabeth Warren also criticized the move, calling it a “joke” without legislative action. She argued that Trump is ignoring the complexity of the financial ecosystem. Warren urged for a more targeted approach to help small businesses.
Despite the warnings, Senator Josh Hawley cheered the move as a “fantastic idea.” The potential impact on small business owners adds another layer of complexity to the debate. As January 20 approaches, the business community is watching closely.