America's largest banks, including JPMorgan Chase, are preparing to contest potential White House efforts to cap credit card interest rates. The financial institutions are bracing for a clash over a proposal, once championed by former President Trump, to limit credit card interest rates to 10 percent. Industry analysts predict the measure could render up to 80 percent of credit card customers unprofitable, potentially leading to a significant reduction in credit availability.

The banking sector argues that capping interest rates would have adverse consequences, including increased inflation expectations and potentially higher interest rates over time. "Anything that chips away at that is probably not a great idea. And in my view, will have the reverse consequences. It'll raise inflation expectations and probably increase rates over time," said a source familiar with the banks' strategy.

The potential cap stems from concerns about the high cost of credit for consumers, particularly those with lower credit scores. However, banks contend that the current interest rates reflect the risk associated with lending to these individuals. A reduction in rates, they argue, would force them to tighten lending standards, disproportionately affecting those who rely on credit cards for essential expenses.

The debate over credit card interest rates is not new, but the renewed focus from the White House has prompted banks to develop comprehensive strategies to defend their current practices. These strategies include lobbying efforts, public relations campaigns, and economic analyses highlighting the potential negative impacts of the proposed cap. The outcome of this battle could significantly reshape the credit card landscape and impact millions of consumers and the financial health of major banking institutions.