New legislation pointed at capping credit card interest rates at 10% will erase card rewards for most consumers, financial experts told the Washington Examiner.

Sens. Bernie Sanders (I-VT) and Josh Hawley (R-MO) introduced the bill on Thursday that would cap credit card interest rates for five years. The bill has been referred to the Committee on Banking, Housing, and Urban Affairs.

“I understand the positive intention of this bill; however, it can come with a few unexpected consequences,” Erica Sandberg, a consumer finance expert for CardRates.com, told the Washington Examiner.

“If the bill passes, the card issuers may react by reducing the opportunity to earn big rewards,” she added. “If you were accustomed to unlimited 2% cash back on everything you spend with no annual fee, that may change, so you won’t earn as much. Annual fees may be imposed or increased, and the valuation of rewards may decline. Generous welcome bonuses may be a thing of the past.”

Sandberg also believes that travel perks like no fees for checked baggage or airport lounge access will be axed to pay for the losses on capped annual percentage rates.

The credit card rewards space has grown in the last few decades. Consumers can now accumulate airline miles on purchases, get cashback, or use a variety of bonuses granted to cardholders. Some sign up for cards just for their sign-up bonuses, which can be a chunk of cashback or miles.

The complete erasure of credit card rewards isn’t a foregone conclusion if the bill passes, Cornerstone Advisors’s Tony Desanctis said. Cornerstone Advisors is a financial consulting business.

“The higher-end cards that are being paid off in full every month with the high annual fees, are the ones that are likely to have the least impact, and perhaps some of the marginal rewards products that are out there for affluent or mass market consumers would likely go down significantly,” he said.

Other consequences include grace periods being taken away from credit cards entirely, meaning interest will accrue at the time of purchase, Desanctis said. He added that he believes a lot fewer consumers would be eligible for credit cards if the bill is passed.

Credit card issuers such as Capital One, who “lend deeper,” or lend to riskier consumers, but charge higher interest rates to make up for the risk, will be in trouble. “In a world where 10% is the maximum interest rate and you can’t get paid for the additional risk, you assume those cards all go away,” Desanctis said.

President Donald Trump backed a 10% rate cap at a campaign rally in September. “While working Americans catch up, we’re going to put a temporary cap on credit card interest rates at 10%. We have no choice,” he said at the time.

Treasury Secretary Scott Bessent was asked during his confirmation hearing whether he would support a cap on credit card interest. He responded that he’d follow whatever Trump supported. The president hasn’t made any moves toward capping credit card interest since he’s been in office.

Desanctis says he believes a 10% rate cap could be a starting point for Trump to negotiate something such as an 18% cap. “That’s the starting salvo, and we end up [with] 18% national cap or something, something more reasonable from an economic perspective, that has less direct impact, especially on lower-income consumers trying to build credit.”

The American Financial Services Association, a trade association for the consumer credit industry, has blasted rate caps in the past. “They are unworkable and actually harm the consumers policymakers are trying to help, by limiting the types of credit tens of millions of Americans depend on more than ever,” AFSA said in a statement.

“Several academic studies have proven that the data backs up concerns about rate caps tightening access to credit to the Americans who need it the most,” the trade association added.

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It’s unknown if the bill could pass the Senate or House, but bipartisan collaboration between Sanders and Hawley, mixed with Trump possibly backing the bill, could prove to be a powerful driver.

The Washington Examiner reached out to the White House to ask if Trump would back the bill but received no response.