Dear Reader,
Good morning.
This is Dylan Jovine with Behind the Markets.
Happy Monday.
Today is Monday, January 26th.
My goodness — this year is already flying by. Time moves faster as you get older… and it certainly doesn't help that it feels like we're living through world-historical events every single day.
Honestly, there are moments when I envy the folks on a ranch in Wyoming who don't plug into the news at all. God bless them.
But today, I want to talk about something that's quietly moving into focus — President Trump's push to cap credit card interest rates.
In plain terms, this would amount to price controls on credit.
And the longer you watch Trump operate, the more you realize how Nixonian his instincts really are. This isn't Reagan-style conservatism. It's a much more activist, interventionist approach — closer to post-war Republicanism than modern free-market orthodoxy.
That's not a judgment. It's an observation.
So let's talk about how this actually works in the real world.
Credit cards are unsecured debt. There's no collateral. Which means lenders price risk very carefully.
Imagine you're running a credit card business.
You don't lend the same way to someone with an 800 credit score as you do to someone with a 500 score. You can't. The higher the risk, the higher the interest rate — not because lenders are evil, but because math demands it.
High-risk borrowers pay more because many of them don't pay on time… or at all.
If the government steps in and caps interest rates across the board, here's what happens — and this is business 101:
Lenders tighten underwriting standards.
They stop lending to high-risk borrowers entirely.
Credit limits get cut.
Rewards disappear.
Annual fees rise.
Monthly maintenance fees appear.
In other words, credit becomes scarcer — especially for the people who need it most.
I'm not here to defend credit card companies. I don't like them any more than you do. But pretending this won't happen is childish.
We've seen this movie before.
Illinois tried it. Credit dried up.
Oregon tried it. Same result.
The UK tried it. Same story.
Chile tried it. Same outcome.
Price controls don't lower costs. They change behavior — and usually not in the way policymakers intend.
Ironically, once you're financially stable, credit is thrown at you constantly. When you actually need it, that's when it becomes expensive — or unavailable.
That's the cruel irony of the system.
My suspicion? Trump will extract a "win" here.
Banks will roll out a new capped-rate card — maybe 10% — issued only to ultra-low-risk borrowers. Trump gets a headline. The banks protect their margins. Everyone claims victory.
But if this turns into a true cap across the industry, lenders will simply exit the riskiest parts of the market.
And that's when the unintended consequences begin.
So this isn't about politics.
It's about understanding incentives.
And as investors, that's always the real game.
That's all I have for today.
Have a wonderful day.
I'll see you tomorrow.
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