A policy meant to make borrowing cheaper could end up changing who gets access to credit at all.
That is the likely outcome of a proposed 10% cap on credit card interest rates, according to SoFi Technologies (NASDAQ:SOFI) CEO Anthony Noto.
In a recent post on X, Noto responded to President Donald Trump‘s proposal, saying the immediate effect would likely be a contraction in credit card lending rather than a drop in consumer demand for borrowing.
“If this is enacted—and that’s a big if,” Noto wrote, “we would likely see a significant contraction in industry credit card lending.”
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Noto said credit card issuers would struggle to sustain profitability under a 10% rate cap because cards are unsecured and issued across a wide range of borrower risk profiles. Without the ability to price for risk, many accounts would no longer make financial sense.
Issuers could respond by reducing approvals, lowering credit limits, or closing accounts altogether. Noto said interest-rate caps do not remove risk from the system but shift where it appears.
Even so, he said the need for credit would remain.
“Consumers, however, will still need access to credit,” Noto wrote, pointing to routine expenses and unexpected costs that continue regardless of policy changes.
He added that many borrowers are drawn to high-reward credit cards and later carry balances of tens of thousands of dollars at annual percentage rates of 20% to 30%. “In many cases, those balances are effectively interest-only and can persist indefinitely,” Noto wrote.
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As access to credit cards narrows, Noto said borrowing would likely shift toward other options, including installment products such as personal loans and similar installment products, because consumers still need access to credit.
He said personal loans typically offer lower interest rates and fully amortizing structures that pay balances down over time. If credit card lending contracts, he wrote, those loans could become an option borrowers choose earlier — before accumulating high-interest revolving balances.
