President Donald Trump's demand for a 10% cap on credit card interest rates, issued a week ago with a compliance deadline of January 20, has left consumer groups, politicians, and bankers uncertain about the White House's intentions. With the deadline rapidly approaching, the administration has yet to provide specifics on how it plans to enforce this mandate.

White House Press Secretary Karoline Leavitt stated on Friday that the president "has an expectation that credit card companies will accede to his demand that they cap interest rates on credit cards at 10." She added, "I don’t have a specific consequence to outline for you but certainly this is an expectation and frankly a demand that the president has made."

The potential impact of such a cap is significant. Research conducted when Trump initially proposed the idea during his 2024 presidential campaign indicated that Americans could save approximately $100 billion annually in interest payments. The same research suggested that while the credit card industry would face a substantial financial impact, it would remain profitable, although consumer rewards programs and other benefits might be reduced or eliminated.

The lack of clarity surrounding the enforcement mechanism raises questions about the feasibility and enforceability of the proposed cap. Legal challenges are anticipated if the administration attempts to implement the cap without clear statutory authority from Congress. The credit card industry is likely to argue that such a cap constitutes an overreach of executive power and could lead to unintended consequences, such as reduced access to credit for consumers with lower credit scores.

The concept of using artificial intelligence (AI) to analyze the potential economic effects of such policies is gaining traction. AI models can be trained on vast datasets of consumer spending, credit card usage, and macroeconomic indicators to predict the likely outcomes of interest rate caps. These models can also assess the distributional effects, identifying which segments of the population would benefit most and which might be negatively impacted.

However, AI-driven policy analysis is not without its limitations. The accuracy of the predictions depends on the quality and completeness of the data used to train the models. Furthermore, AI models can only identify correlations and patterns in the data; they cannot predict unforeseen events or behavioral changes that might result from the policy change. Therefore, human oversight and critical evaluation are essential when using AI to inform policy decisions.

As the January 20 deadline approaches, the credit card industry is closely monitoring the White House for further guidance. The lack of specific details regarding enforcement leaves the industry in a state of uncertainty, potentially impacting investment decisions and consumer lending practices. The coming days will be crucial in determining whether the Trump administration will take concrete action to implement the proposed interest rate cap and what the potential consequences of such action might be.