Credit card caps sound great. Here's who actually benefits.

Money news for your Monday.

Today is Martin Luther King Jr. Day — a reminder that economic justice and racial justice have always been inseparable. Dr. King was organizing the Poor People’s Campaign when he was assassinated. The work continues.

If you’re looking to put money toward that work today, consider donating to National Urban League or Poor People’s Campaign.

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💸 Credit card caps sound great. Who actually benefits?

Last week, Trump called for a one-year cap on credit card interest rates at 10%. This echoes a bill introduced last year by Senators Bernie Sanders and Josh Hawley (yes, those two agreeing on something) — capping rates at 10% for five years.

“Working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon,” Hawley said at the time.

He’s not wrong. The average credit card APR is now over 20%. Americans are carrying more than $1 trillion in credit card debt. And as consumer protection experts have said, high interest rates aren’t a glitch in the system — they’re a feature. Hidden fees, confusing terms, and strategic opacity are how credit cards work.

So capping rates sounds like an obvious fix. Right? Maybe not.

If you cap what banks can charge in interest, they’ll make up the revenue somewhere else. Where? A few places:

1. Your rewards might disappear. Those points, miles, and cash back? They’re funded by a combination of merchant fees and interest from people who carry balances. If interest income drops, issuers will likely slash rewards for everyone except their most profitable customers. Translation: the rich may still get their perks, but others will lose out.

2. Credit access might shrink. When you limit what lenders can charge, they respond by tightening who gets credit. The people most affected are typically those with lower credit scores or thinner files — often the same people caps are meant to protect.

3. You might get pushed toward worse products. A credit card cap would drive people toward personal loans or other alternative credit products (like payday loans, pawn shops, etc) — with their own fees, rigid payment structures, and less consumer protection.

The case for gaps argues that current rates far exceed what's justified, representing extraction rather than risk pricing. But even if rates dropped to 10% tomorrow, would it actually change how people use credit? The psychology of credit card debt isn’t just about interest rates. It’s about:

• Payment decoupling: Swiping often doesn’t “feel” like spending. The pain of paying is delayed, which makes spending easier.

• Optimism bias: We consistently overestimate our future ability to pay things off. (”I’ll deal with it next month.”)

A 10% rate is better than 24%. But if the underlying behavioral traps remain — if credit still feels like free money until it very much isn’t — rate caps alone won’t solve the debt crisis.

Predatory interest rates are a real problem, and the current system is designed to extract maximum value from people who can least afford it. But I would argue this is a band-aid on a system that needs real surgery.

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🔍 In other money news …

First, in honor of Industry Season 4, I would like to present to you the best description of short selling to ever exist:

• Polymarket is everywhere now — including the Golden Globes. The prediction market was an official sponsor this year, because nothing says “prestige entertainment” like betting on award outcomes. Meanwhile, you can now bet on home prices, and the media’s obsession with treating prediction markets as news is raising real concerns about how they might influence elections. (Business Insider)

• “The American worker is becoming more productive.” But what does “productivity” even mean? Technically, it’s total economic output divided by hours worked. But that metric increasingly diverges from anything we’d actually care about. (WSJ)

• Elon Musk says don’t bother saving for retirement because AI will create “abundance for all.” I cannot stress enough how much I hate this argument. We already have the technical capacity to eliminate poverty — we’ve had it for a while. The obstacle has never been productivity or scarcity. It’s been political will and distribution. Why would AI change that? These tech leaders ask us to trust that the same systems that have failed to redistribute wealth for decades will suddenly work perfectly once AI has taken over. (Business Insider)

• The Supreme Court increasingly favors the wealthy. A new study found that Republican appointees voted for the wealthier side in 70% of cases in 2022 — up from 45% in 1953. Economic justice. (NYT)

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It’s a new year and many of the old money rules are dead. I wrote a guide on what to actually do with your money in 2026 — what to stop optimizing, what actually matters, and how to build a financial life that works when nothing else does.

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🍵 Money gossip

• Rich people are starting to create “analog rooms” where they can escape their screens.

• The iconic Tiffany heart necklace which was $200 in 2005 now retails for $2K.

• Kind of obsessed with the concept of seeing white suburban moms wearing multi-hundred dollar tactical gear on their morning walks.

• Climbing Everest has turned into quite the tourist attraction (there’s glamping now, thank god!) — though you’ll need to shell out around $61,000 to go.

• “Until now, the gay men and pop-culture-obsessed women of the world have been marked safe from the sports-betting addiction that has taken over straight men on their phones. MoviePass would like to change that.”

• Mr. Beast says he has “negative money” despite being worth $5 billion. I don’t know if this was supposed to make him relatable, but I don’t think it’s working!

• Obsessed with this man who spent $61,000 to transform part of his backyard into a pub he could enjoy with friends and family.

• Former NYC Mayor Eric Adams launched a crypto coin designed to target “antisemitism” (???) which then plummeted, and is now looking like a rug pull.

• Smart glasses are the new IT item in fashion and I’m pretty confident that at least 50% of those sales are from men who want to non-consensually film women in public.

• More Americans than ever are stuck with $1,000+ monthly car payments.

• How $89 sweatshirts became a status symbol for teen girls.

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💡 LONG READS

How America’s High Schools Are Teaching Capitalism (Business Insider) “Teachers across the US said their curriculum on capitalism has evolved as students become more aware of economic conditions with the rise of digital media and social platforms — or in their own experience.” Fascinating look at how the next generation is learning to think about economic systems.

I’d Rather Be Kinda Poor Than Work Most Jobs (Claire’s Substack) “Everyone has an idea of what I was ‘meant’ to do. But what if I was just meant to be a complete person who can pursue whatever it is I am intrigued with as a multi-faceted approach to life?” A meditation on opting out of career identity — and what it costs (and doesn’t cost) to do so.

Disney and the Decline of America’s Middle Class (NYT) “When you are at a Disney park, you will inevitably hear “When You Wish Upon a Star,” Disney’s unofficial anthem. Its second line, “makes no difference who you are,” encapsulated its egalitarian ethos. Now the song reads to me like nostalgic, middle-class cosplay that helps us relive the Disney that Walt created.”

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See you Wednesday.

Stay curious, Hanna

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