Consumer Lending NAICS 522291

Jan 16, 2026 - Proposed Credit Card Interest Rate Cap a Tough Sell

• The Trump administration has proposed capping credit card interest rates at 10% for one year, beginning January 20, 2026, aiming to reduce the burden of high interest for American consumers. Trump argues current rates - often above 20% - are unfairly high and need to be limited. Financial industry leaders and economists counter that such a cap could restrict access to credit, particularly for borrowers with lower credit scores, because banks would struggle to make profitable loans under the limit. Major banks like JPMorgan and Citi have warned the cap could hurt consumers and the broader economy. The plan has drawn mixed political reactions: some praise its intent to help borrowers, while others - including lawmakers - doubt its legal feasibility without congressional approval. Implementation details remain unclear, and experts caution about unintended consequences, such as reduced credit availability and shifts to higher-cost lending alternatives.
• US household debt reached a record high of $18.5 trillion in the third quarter of 2025, increasing about $197 billion from the previous quarter. Student‑loan debt rose to $1.65 trillion, with roughly 10 % at least 90 days delinquent, signaling ongoing repayment challenges for many borrowers. Credit‑card balances climbed to $1.23 trillion, up $24 billion in just the quarter and nearly 6 % higher than a year earlier, reflecting growing consumer spending and higher borrowing costs. Auto loans and other forms of consumer credit also contributed to the overall increase in household debt. Despite the record levels, the Federal Reserve Bank of New York notes that most household balance sheets remain relatively strong, though younger Americans and those carrying higher debt loads are showing signs of financial stress. Economists caution that continued interest-rate hikes and rising debt could pose challenges for households in the months ahead.

• Credit risk is on the rise in the US as delinquencies in auto loans and credit card payments have reached the highest levels of the decade, according to trade association America’s Credit Unions. Underwater auto loans have been flirting with pandemic-level defaults, and credit card delinquencies are the most they’ve been since The Great Recession. While the rise is significant, the delinquencies have nonetheless shown signs of stabilizing, but the trend worries leveraged credit unions. Consumer credit scores during and immediately after the pandemic were artificially inflated since loans at that time were practically interest-free. Government stimulus payments were used by many consumers to pay down debt, thus raising credit scores above 720 for many borrowers. Now, more than 20% of those borrowers have scores below 720 once debt accumulated again at higher interest rates. If the labor market continues to decline, experts expect delinquencies to rise even higher.
• Cash-strapped Americans are increasingly turning to on-demand pay apps to get cash immediately after working, rather than waiting for paychecks. DailyPay, FlexWage, and Tapcheck are on-demand services that let users withdraw pay they have already earned ahead of time. Marketed as alternatives to payday loans, on-demand payment services charge one-off fees (usually $2-$5) for their use rather than interest rates. They can be convenient for those living paycheck to paycheck to pay bills, but too much use means when your paycheck does arrive it will be much smaller. The popularity of such apps is rising as America’s total household debt hit a record high of $18.2 trillion in Q1 2025, according to the Federal Reserve. Roughly $5 trillion of that debt is consumer-based and non-housing related. A recent survey from finance firm Achieve found that 35% of consumers say they can’t pay all of their bills on time.