SoFi CEO Backs Trump's Credit Card Interest Cap

SoFi CEO Anthony Noto has weighed in on President Donald Trump's proposed 10% cap on credit card interest, suggesting it would be beneficial for his company. While many banking industry leaders have criticized the plan, Noto argued that a contraction in credit card lending would drive consumers toward personal loans. He stated that SoFi is well-positioned to fill the void left by credit card issuers who cannot sustain profitability at a 10% rate cap.

The proposal, which would require an act of Congress to enact, has drawn mixed reactions from the financial world. Billionaire Bill Ackman and several banking associations have warned that the cap would result in canceled credit cards and force consumers toward riskier alternatives. Noto, however, views the potential shift as a significant opportunity for the personal loan market.

In an X post on Saturday, Anthony Noto expressed that President Trump's proposed interest rate cap could significantly alter the lending landscape. Noto wrote that the cap would likely cause a "significant contraction in industry credit card lending" because issuers cannot sustain profitability at a 10% rate. However, he emphasized that consumers would still require access to credit.

Noto highlighted that this creates a "large void" that SoFi personal loans are prepared to fill. He noted that personal loans could serve as a viable alternative for consumers looking to address debt. Additionally, Noto mentioned that if the scenario plays out, "underwriting discipline and borrower education become even more important."

Despite the potential benefits for his company, Noto acknowledged the uncertainty surrounding the proposal, noting that enactment is a "big if," though he admitted "part of me hopes it is."

President Donald Trump called for the one-year 10% cap in a Truth Social post on Friday. He stated that his administration would "no longer let the American Public be ripped off by Credit Card Companies" that charge interest rates of 20% to 30% or more. The proposal has drawn immediate concern from various corners of the financial world.

Billionaire CEO Bill Ackman criticized the decision in a now-deleted X post, calling it a "mistake." Ackman argued that without the ability to charge rates adequate to cover losses, credit card lenders would cancel cards for millions of consumers. He warned that these consumers would be forced to turn to "loan sharks" for credit at rates higher and on terms inferior to what they previously paid.

Several banking associations, including the American Bankers Association and the Consumer Bankers Association, issued a joint statement criticizing the cap. They stated that the cap would drive consumers toward "less regulated, more costly alternatives."

The debate centers on how a 10% rate cap would affect consumer access to credit. Bill Ackman elaborated on his concerns in a subsequent X post, acknowledging that reducing credit card interest rates is a "worthy and important" goal. However, he maintained that capping rates at 10% would inevitably cause credit card companies to cancel cards as they lose the ability to price subprime credit risk adequately.

According to Ackman, consumers denied credit cards would face "vastly worse" rates and terms from loan sharks. Similarly, the banking associations warned that the cap would limit access to necessary credit unless the administration works with the industry to find a solution.

In contrast, Anthony Noto views the potential reduction in credit card lending as a direct path to increased personal loan volume. His perspective suggests a divergence in how different financial sectors view the impact of regulatory caps on consumer behavior.

The proposal to cap credit card interest at 10% has sparked a significant divide within the financial industry. While Anthony Noto of SoFi sees a strategic opening for personal loan providers, critics like Bill Ackman and major banking associations fear severe consequences for consumer credit access. As the proposal requires an act of Congress to become law, the discussion regarding its potential impact on the economy and individual borrowers is likely to continue.