Although the details of any cap would depend on legislation and regulatory guidance, understanding the potential outcomes can help merchants and payments professionals prepare for how the market could respond.

Below is a look at what a 10% credit card interest rate cap might mean for each group involved.

How a 10% Interest Rate Cap Could Affect Cardholders

Lower interest costs for some consumers

For cardholders who carry balances from month to month, a lower APR could reduce interest charges and make debt easier to manage—assuming they retain access to the same credit lines and card products.

However, interest savings would primarily benefit consumers who already qualify for and maintain revolving credit.

Tighter access to credit

Credit card interest rates are a core tool banks use to price risk. If issuers are unable to charge higher rates for higher-risk borrowers, they may respond by:

• approving fewer applicants,
• lowering credit limits,
• discontinuing entry-level or subprime cards.

This could make it harder for certain consumers—especially those with limited or damaged credit—to qualify for traditional credit cards at all.

Fewer rewards and promotional offers

When interest revenue is restricted, issuers often look to offset lost income elsewhere. Cardholders could see:

• reduced rewards programs,
• fewer 0% introductory offers,
• shorter promotional periods,
• higher annual or account-related fees.

While APRs may fall, the overall value proposition of some cards could change.

A widening gap between prime and non-prime borrowers

Higher-credit consumers may continue to receive attractive card offers, while others may face fewer options or be pushed toward alternative financing methods such as installment plans or buy-now-pay-later solutions.

How Issuing Banks Might Respond

Changes to underwriting and risk models

Credit cards are unsecured loans. Issuers rely on interest income to cover:

• fraud losses,
• charge-offs,
• servicing costs,
• rewards and marketing expenses.

A cap could force banks to rework underwriting models and potentially shrink their exposure to higher-risk accounts.

Shifting revenue to fees

If interest margins are compressed, banks may increase reliance on:

• annual fees,
• balance transfer fees,
• late fees (where allowed),
• foreign transaction fees,
• reduced grace periods or incentives.

This could change how card costs are experienced by consumers—even if the APR itself is lower.

Reduced product innovation

Uncertainty around pricing flexibility may slow innovation in card products, rewards structures, and consumer incentives, at least in the short term.

What This Could Mean for Merchants and the Merchant Processing Industry

While an interest rate cap targets consumer borrowing, not merchant processing fees, the effects could still ripple through the payments ecosystem.

Changes in consumer payment behavior

If credit becomes harder to access or less attractive, consumers may:

• use debit more frequently,
• favor lower-cost payment methods,
• reduce discretionary spending.

This can affect:

• average ticket size,
• transaction mix (credit vs. debit),
• approval rates in certain industries.

Potential shifts in card rewards usage

If rewards programs are scaled back, some consumers may be less motivated to use premium rewards cards. Over time, this could influence the types of cards presented at checkout and affect a merchant’s effective processing costs.

Increased scrutiny across the payments system

Major policy changes often increase debate around who bears the cost of payments. Merchants may see renewed attention on:

• interchange economics,
• card network rules,
• routing and competition discussions,
• pricing models such as dual pricing or debit optimization.

More focus on payment choice and cost control

Regardless of whether a cap is enacted, discussions like these often push merchants to:

• review their statements more closely,
• evaluate debit and alternative payment acceptance,
• ensure pricing models align with their business and customer base,
• invest in modern terminals and payment technology that provide flexibility.

Key Details Merchants Should Watch

If a 10% interest rate cap moves forward, the details will matter more than the headline. Important considerations include:

• which card types are covered,
• how APR is defined and enforced,
• how long the cap lasts,
• how issuing banks adjust their products and policies.

Each of these factors could influence consumer spending patterns and payment behavior.

Beacon Payments Perspective

A cap on credit card interest rates could provide relief to some cardholders, but it would also reshape how credit is offered and how card products are structured. For merchants, the impact would likely be indirect—showing up through changes in consumer behavior, card usage, and payment mix rather than through immediate changes to processing fees.

The most effective response for businesses is flexibility: offering multiple payment options, understanding effective rates, and working with a payments partner that helps navigate change rather than react to it.