FINANCIALS, PAYMENTS, PROPERTY & INSURANCE

GLO Editorial. The Battle Over Card Fees & Future of Loyalty Rewards: Trump’s Push on APR Caps & Swipe Fees

GLO

January 16, 2026

In mid-January 2026, President Donald Trump reignited debate across the U.S. payments industry by backing a two-pronged strategy aimed at limiting consumer credit card costs. The approach combines support for a temporary cap on credit card interest rates with renewed momentum behind reforms that would change how credit card transactions are routed and priced. Together, these moves have the potential to reshape credit availability, rewards economics, and the long-standing relationship between card issuers, merchants, and loyalty partners.

A proposed cap on credit card interest rates
Trump has publicly supported a one-year cap on credit card annual percentage rates (APRs), set at 10%, positioning it as immediate relief for consumers grappling with high borrowing costs. While details remain unclear—such as whether the cap would apply to all cards or only certain balances—the proposal has sparked intense debate. Banks and industry groups argue that a strict cap could reduce access to credit, particularly for higher-risk consumers, and weaken the revenue streams that fund rewards and card benefits.

A renewed push on swipe fees and routing competition
Alongside the APR proposal, Trump has expressed support for efforts to increase competition in how credit card transactions are routed. These proposals would require large issuers to enable multiple unaffiliated payment networks, challenging the current dominance of major card networks. Proponents argue this could lower costs for merchants, while opponents warn it could disrupt fraud protections and the economics that underpin card rewards.

Why This Matters: How Credit Cards Are Funded

Most credit card products rely on a balance of three revenue sources:

• Interest income from cardholders who carry balances

• Interchange fees paid by merchants on each transaction

• Annual fees and partner economics, particularly on premium and co-branded cards

Pressure on interest income or interchange fees doesn’t simply disappear. Instead, it often leads to changes elsewhere—tighter credit standards, higher annual fees, reduced rewards, or fewer perks.

Global Loyalty Organisation: Possible Scenarios to Watch

Several realistic paths could emerge:

• Political pressure without legislation: Even if a formal APR cap never becomes law, issuers may proactively adjust pricing, expand promotional APR offers, or tighten underwriting to manage risk.

• Targeted or partial caps: If limits are applied only to certain products or consumer segments, banks may shift customers toward alternative products such as charge cards, installment plans, or secured credit.

• Routing reform advances: Greater routing competition could compress interchange revenue, forcing issuers and networks to revisit rewards funding, fraud investments, and partner agreements.

Implications for Major Card Issuers

For large issuers, these developments could accelerate changes already underway:

• Rewards programs may face pressure as the economics that subsidize points and perks become less predictable.

• Premium customers are likely to remain highly valued, while mass-market and near-prime segments may see tighter credit access and leaner benefits.

• Issuers may push harder to renegotiate commercial terms with airline, hotel, and retail partners to preserve margins.

What This Means for Co-Brand Cards and Loyalty Programs

Co-branded credit cards sit at the crossroads of finance and loyalty. If issuer revenue declines:

• Partners may be asked to lower the price at which they sell points or miles to banks, or to contribute more marketing support.

• Costly perks such as lounge access, free bags, elite credits, or anniversary awards could be restructured or restricted.

• Issuers may prioritize fewer, higher-performing co-brands while scaling back or exiting less profitable partnerships.

Impact on Consumers and Points Accumulation

For consumers, the effects may be subtle at first but meaningful over time:

• Base earning rates and bonus categories could flatten or become more restricted.

• More value may shift behind annual fees, spend thresholds, or targeted offers rather than broad earn rates.

• Redemption value could fluctuate as programs adjust pricing, availability, or transfer partnerships to protect margins.

From a loyalty and rewards perspective, the policy environment creates several forward-looking scenarios:

1. Loyalty becomes more personalised and gated
   Broad, generous earn rates may give way to targeted offers, personalised bonuses, and spend-based rewards designed to control costs while maintaining engagement.

2. Co-brand loyalty programs consolidate
   Issuers and brands may focus on fewer, deeper partnerships, concentrating investment where loyalty drives the most profitable behaviour.

3. Points economics tighten—but don’t disappear
   Rewards are unlikely to vanish, but consumers may need to spend more, pay higher fees, or accept fewer perks to earn the same value.

4. New value exchanges emerge
   As traditional rewards face pressure, brands may experiment with non-monetary benefits—experiences, status recognition, or exclusive access—to sustain loyalty without relying solely on points.

Trump’s fee-limiting strategy targets the financial foundations of modern credit cards. Whether fully enacted or not, it is already influencing how issuers, networks, and loyalty partners think about pricing, rewards, and long-term sustainability. For consumers and brands alike, the next phase of loyalty is likely to be more selective, more strategic—and more closely tied to profitability than ever before.

Source: GLO