MW Credit-card rewards are under siege - for everyone but the rich
Andrew Keshner
If President Trump succeeds in capping credit-card APRs at 10%, card issuers could ramp up efforts to keep their best customers
If credit-card APRs are capped for a year at 10% as President Donald Trump wants, the credit-card points game could change - but not if you're in this group.
The booming ecosystem around credit-card points may soon come crashing down - and only a small subset of consumers could keep cashing in.
Credit-card rewards could become much less rewarding if President Donald Trump succeeds in capping credit-card interest rates at 10% for one year, experts say. That would slash the average annual percentage rate roughly in half, a move meant to help consumers chip away at their debt burdens.
But the current credit-card business model depends on customers who don't pay off their balances and end up with hefty interest payments. With less interest money flowing from those unpaid balances, banks would need to dramatically alter their business models and customer offerings.
This could involve curbing customers' credit limits, increasing fees - some of which were already approaching $1,000 a year - or shutting some consumers out of the ecosystem entirely. Banks and card companies also may have to cut back the programs that entice customers to keep spending in exchange for cash back, points and airline miles.
But people with sterling credit scores who pay off their credit-card bills regularly might escape that new reality and keep taking advantage of rewards programs.
There are two possibilities for rewards if a 10% temporary cap materializes, said Dave Grossman, founder of YourBestCreditCards.com. One is the "doomsday scenario" of a widespread end to rewards programs. But the more likely one makes card issuers focus on their top-end customers.
That could mean offering even more rewards and incentives, he said: "It's, 'How do we keep our best customers and derisk our lower-credit-profile customers?'" The result would be one more wedge to deepen the economy's K-shaped divide that has upper-income people doing most of the consumer spending while lower-income households cut back, Grossman noted.
Consumers with credit scores of at least 800, which is considered excellent, might see some scaling back of their points programs, but the offers and enticements would stick around, said Tod Gordon, a senior advisor at Klaros Group, an advisory firm for banks and fintechs.
Nearly one-quarter of consumers (23%) have scores over 800, according to Experian (UK:EXPN) (EXPGY) data. Credit scores reflect a person's payment history, not their income - but higher-income households generally have higher credit scores because there's more money for bills.
Banks have an incentive to hold on to customers with superhigh credit scores who can be lucrative in other ways, Gordon noted. Financial-services companies may deem it worthwhile to keep offering rewards to these customers, by monetizing the swipe fees associated with their purchases and then hoping those customers end up taking out loans or opening up other accounts. Yet below the boundary of a 700 credit score, the prospect for rewards is "definitely more grim," he added.
For customers with revolving balances, banks likely would take a big profit hit if they slashed interest rates on cards to 10%, Gordon said. "The banks are just going to have to make it up somewhere else, and the easiest place is rewards."
Yet it's important to think about the full cost consumers pay now for their loyalty programs - including large amounts of interest and the chance of hefty late fees, said Mike Pierce, executive director of Protect Borrowers.
Card issuers "are soaking their working-class customers right now," said Pierce, who leads a consumer advocacy group focused on Americans' high debt burdens. "In the arms race between credit-card banks for those elite customers at the very, very top, I think they are going to be just fine."
A 10% cap would reduce annual rewards by $27 billion dollars, according to a study from last fall by Vanderbilt University's Brian Shearer. Banks would likely start whittling back rewards for customers with FICO $(FICO)$ scores below 760, wrote Shearer, who is director of competition and regulatory policy at the Vanderbilt Policy Accelerator. Rewards programs would likely end for customers with credit scores under 700, he wrote.
Someone carrying a roughly $6,700 balance would save $899 each month with a 10% annual percentage rate, according to Shearer's estimates. But they could lose out in other ways, as Shearer wrote that lenders could reduce card offers for customers with FICO scores under 600.
Credit-card rewards have boomed in recent years, underscoring a divided ecosystem in which wealthier cardholders have taken advantage of lucrative payouts while lower-income customers have racked up soaring debt while trying to make ends meet.
In 2024, card issuers paid out $47.5 billion in rewards, almost double the amount paid in 2020, according to the most recent data available from the Consumer Financial Protection Bureau. Half of the money came from points, even though cash-back cards were more prevalent. Six in 10 card offers included a bonus reward, the report said.
At the same time, banks assessed customers with $160 billion in interest during 2024, the report said - a roughly 50% increase from two years earlier. Just ahead of holiday shopping sprees, Americans held a record $1.23 trillion in credit-card debt in the third quarter of this year, according to the Federal Reserve Bank of New York.
On Tuesday, an analyst asked JPMorgan Chase $(JPM)$ CEO Jamie Dimon about the future of rewards cards and co-branded cards if an APR cap materialized as currently articulated by Trump. The bank would have to make adjustments on a card-by-card basis, but the overall effect would be "dramatic," Dimon said, according to a FactSet transcript.
However, he added, "if it happens in a way which is modified quite a bit, it would be less. And we don't know the number yet, but it would be very dramatic if it was just a cap."
Read also: Credit-card stocks are sliding, but Trump's plan for a 10% rate cap isn't a done deal
JPMorgan Chase CFO Jeremy Barnum warned a 10% cap would curb the supply of credit and "would be very bad for consumers, very bad for the economy." Chase Bank's stable of cards includes its Sapphire Reserve and Sapphire Preferred cards.
People are deeply attached to their credit-card rewards, according to a fall survey conducted for the American Bankers Association. More than 8 in 10 people had at least one credit card with rewards and more than two-thirds (68%) said they would be "disappointed" if they lost their rewards programs due to new government rules.
Though the banking industry has raised concerns that a rate cap would ultimately mean less access to credit for consumers, Pierce at Protect Borrowers said that's an overblown fear.
"It's good to see the president start to care about working people's finances again," Pierce noted. But he said he's still waiting to see if credit-card rates actually will become less expensive.
"It remains to be seen whether this is just words, or whether [Trump] is serious about driving a broader fix to sky-high interest rates that will actually deliver debt relief to people," Pierce said.
-Andrew Keshner
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January 13, 2026 13:12 ET (18:12 GMT)
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