By Sean Wilke, Head of Growth Strategy and Sales, Compliance, U.S.
On January 9, 2026, U.S. President Trump announced his plans to implement a 10% cap on the annual percentage rate (APR) credit card issuers are permitted to charge “hard-working Americans.” The ceiling, which has drawn bipartisan support from both sides of the political aisle, was initially set to take effect on January 20; however, that date has come and passed. Nevertheless, the President’s focus on affordability, coupled with the fact that a cap would result in an estimated $100 billion in consumer savings, likely means the issue is not going away. Banks are on notice that the consumer lending landscape could be materially reshaped.
What does this mean for the credit sector?
Private credit has proliferated in recent years, as tighter risk controls and banking regulations have dampened access to traditional sources of credit. This resulting void has been filled with private lenders and funds that face little regulatory oversight in comparison. So, could lower interest rate limits on credit cards be the next tailwind for private credit? Reasonable minds may disagree, but it seems unlikely private credit would benefit as a whole; however, certain strategies could see incremental demand and pricing power as consumer credit dislocates.
The prevailing industry consensus believes that a 10% APR cap would eliminate the economic viability of most unsecured revolving credit, reduce the total consumer credit outstanding, and increase charge-offs and financial stress for marginal borrowers. Translation: the availability of credit for subprime or near-prime borrowers will dry up considerably. The collateral effect could also include a rise in annual fixed fees (as an alternative to APRs), adoption of penalty fees, elimination of certain rewards, and credit line reductions.
Historically, rate caps have pushed some borrowers toward less regulated channels. Where private credit may stand to benefit is funding non-bank consumer lenders as senior or fintech warehouse lenders, forward-flow purchasers, or net asset value (NAV) lenders to fintech originators. In this scenario, the target borrowers would be marketplace installment lenders, “buy now, pay later” (BNPL) platforms, specialty finance companies, and revenue-based financiers.
Private credit is unlikely, however, to replace the role banks play in the credit card ecosystem. Private credit funds target illiquid, high-yield bespoke loans and rely on longer duration and covenant protection. As a corollary, they avoid small ticket sizes, daily draw/paydown behavior, and high servicing and fraud costs. In addition, structural adjacencies to credit card administration also diminish the attractiveness of the opportunity set: the national servicing platforms, fraud monitoring systems, new regulatory burdens, and interchange economics and scale. Private credit will likely position itself as a capital provider to the bank alternatives rather than issuers themselves.
As such, while private credit may see only nominal, indirect benefits to APR limits, fintech companies may be better suited to capitalize on the dislocation. This includes marketplace lenders, BNPL providers, installment platforms, earned wage access, and revenue-based financing for individuals and small businesses. Alternative solutions would likely avoid the “credit card” designation and would be structured as closed-end installment products with effective rates in excess of 10% (where legally permissible).
