A government-mandated cap on credit card interest rates removes lenders' ability to price for risk. Consequently, they may stop lending to individuals with lower credit scores, inadvertently forcing these borrowers to seek much worse options like payday or title loans with triple-digit interest rates.

PNC's CEO explains that even at an average rate of 18%, the net margin on credit cards is only around 4% after accounting for rewards, losses, and funding costs. Capping rates at 10% would turn this margin negative, forcing issuers to exit the business and cutting off consumer credit access.

By encouraging users to save low-cost payment methods (like bank accounts), Stripe's Link product effectively creates a distributed, techno-social renegotiation of interchange fees. It gives millions of small businesses the collective bargaining power that only giants like Walmart traditionally wield against payment networks.

A surprisingly large portion of high credit card APRs covers operating expenses, particularly marketing. Issuers like Amex and Capital One spend billions annually on customer acquisition. This spending is passed directly to consumers, as higher marketing budgets correlate with higher chargeable rates.

A proposed 10% cap on credit card interest rates, while intended to improve affordability, would likely have the opposite effect. This policy would probably force lenders to tighten credit standards to offset lower profitability, ultimately restricting credit access for the very subprime consumers and balance-carriers it aims to help.

Regulatory capture is not an abstract problem. It has tangible negative consequences for everyday consumers, such as the elimination of free checking accounts after the Dodd-Frank Act was passed, or rules preventing physicians from opening new hospitals, which stifles competition and drives up costs.

A government-imposed cap on credit card interest rates would make the business model unviable for most customers due to risk-reward dynamics. Banks would be forced to deny cards to anyone but the lowest-risk individuals, effectively canceling access to credit for the majority of the population.

High interchange fees on premium credit cards fund rewards for affluent users. Merchants bake these fees into universal pricing, meaning customers paying with cash or debit cards—who receive no rewards—effectively subsidize the perks of wealthier individuals. This creates a wealth transfer from the poor to the rich.

Unlike many nations, the U.S. lacks a government-backed instant payment system due to bank lobbying that protects high credit card fees. This "regulatory capture" creates a massive opportunity for stablecoins to offer the instant, low-cost transfers that directly threaten Visa and Mastercard's high-margin business model.