Originally published at washingtontimes.com February 10, 2026.
Washington has a long history of mistaking resentment for a desire for reform. That impulse is now on full display in the growing populist push to “do something” about credit cards.
Proposals to slash interchange fees, dismantle rewards programs or impose an arbitrary 10% interest rate cap may feel satisfying, yet they are simultaneously economically reckless.
Last week’s exchange in the House Financial Services Committee between Rep. Jim Himes and Treasury Secretary Scott Bessent captured the confusion. Mr. Himes asked whether capping interest rates or late fees could restrict access to credit.
Originally published at washingtontimes.com February 10, 2026.
Mr. Bessent acknowledged that risk. Then he pivoted to a familiar claim: Credit cards no longer compete on annual percentage rates. They compete on rewards.
Mr. Bessent said subprime borrowers pay higher interest rates, whereas wealthier consumers accrue points and perks. The implication was that rewards programs are the problem.
That argument sounds intuitive until it collides with evidence.
The Federal Reserve study on credit card rewards concluded that credit card rewards do redistribute wealth, but not along income lines. The transfer runs from less financially sophisticated consumers to more sophisticated ones. High-FICO borrowers optimize rewards and avoid interest. Low FICO borrowers often pay far more in interest than they ever receive in rewards.
That distinction matters because it undercuts the entire regulatory narrative. It’s a function of financial behavior and policy proposals that pretend complexity can be regulated away.
Meanwhile, interchange fees, vilified by retailers, remain the financial backbone of the modern credit card system. Interchange fees fund fraud protection, zero-liability guarantees and rewards programs. Micromanaging interchange fees would result in a narrower, more exclusive and less accessible system for those outside the top credit tiers.
We’ve seen it before: The Durbin Amendment, which instituted price controls on debit interchange fees, reduced debit card programs. Gone are the days of free checking accounts. Post-Durbin, debit cards provided fewer rewards, higher annual fees and reduced access for marginal consumers. Retail prices did not fall, a consequence confirmed by the Richmond Fed. Banks simply adjusted elsewhere.
Now, Washington wants to repeat the experiment, with higher stakes.
Mr. Trump’s proposed 10% cap on credit card interest rates, embraced by figures as different as Josh Hawley and Bernard Sanders, would be far more destructive. A cap at that level would rewrite credit underwriting overnight.
Interest rate caps are price controls. Whether imposed on rent, food, energy or credit, price controls do not solve shortages. They create them.
A New York Fed study examined state-level usury limits, typically set at 36%, tracking households across multiple states. The findings were clear: Neither financial distress nor borrower outcomes improved. Strangely, credit did not disappear. It moved.
Access to credit contracted sharply for the riskiest borrowers. The number of open accounts fell by double digits. Delinquencies did not decline; instead, risky borrowers lost access to credit. Lenders then redirected capital toward safer borrowers. Credit expanded for consumers with higher credit scores. Rate caps reallocated credit upward, away from those most in need of flexibility.
Faced with a ceiling that makes lending to subprime and deep subprime borrowers uneconomic, issuers would pull back, tighten standards and focus on the lowest-risk customers. Credit would become cheaper for those who already have it and unavailable for those who do not.
Do rewards benefit high-income, high-FICO borrowers? Yes, and a rate cap would permanently lock in that advantage by eliminating risk-based pricing altogether. The affluent would retain access. Everyone else would lose it.
That is why the Himes-Bessent exchange mattered. Mr. Himes asked whether these policies could backfire. Mr. Bessent acknowledged they could, but stopped short of the obvious conclusion. Dismantling rewards, capping rates or gutting interchange will not create a fairer system. It will create a smaller one.
Credit cards are not a moral failing. They are financial instruments that work because multiple components offset one another. Interchange, rewards and risk-based pricing form a delicate ecosystem. Pull too hard on any one piece, and the whole system unravels.
If lawmakers care about affordability and access, then they should stop trying to interlope in complex markets with overly simplistic price controls. The real costs of these proposals won’t show up in a press release. It will show up when millions of Americans are told they no longer qualify for credit at all.