Behind the credit card, ubiquitous in American economic life now for decades, stand a very few gigantic financial institutions that exert nearly unlimited power over how much consumers and businesses pay for the use of a small piece of plastic. American consumers and small businesses alike are spitting fire these days about the cost of credit cards, while the companies profiting from them are making money hand over fist.

We are now having a national conversation about what the federal government can do to lower the cost of credit cards. Sens. Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., truly strange political bedfellows, have proposed a 10% cap. Now President Donald Trump has too. But we risk spinning our wheels if we do not face facts about the underlying structure of this market.

We should dispense with the notion that the credit card business in the United States is a free market with robust competition. Instead, we have an oligopoly of dominant banks that issue them: JPMorgan Chase, Bank of America, American Express, Citigroup and Capital One, which together account for about 70% of all transactions. And we have a duopoly of networks: Visa and Mastercard, who process more than 80% of those transactions.

The results are higher prices for consumers who use the cards and businesses that accept them. Possibly the most telling statistic tracks the difference between borrowing benchmarks, such as the prime rate, and what you pay on your credit card. That markup has been rising steadily over the last 10 years and now stands at 16.4%. A Federal Reserve study found the problem in every card category, from your super-duper-triple-platinum card to subprime cardholders. Make no mistake, your bank is cranking up credit card rates faster than any overall increase.

If you are a small business owner, the situation is equally grim. Credit cards are a major source of credit for small businesses, at an increasingly dear cost. Also, businesses suffer from the fees Visa and Mastercard charge merchants on customer payments; those have climbed steadily as well because the two dominant processors use a variety of techniques to keep their grip on that market. Those fees nearly doubled in five years, to $111 billion in 2024. Largely passed on to consumers in the form of higher prices, these charges often rank as the second- or third-highest merchant cost, after real estate and labor.

There is nothing divinely ordained here. In other industrialized countries, the simple task of moving money — the basic function of Visa and Mastercard — is much, much less expensive. Consumer credit is likewise less expensive elsewhere in the world because of greater competition, tougher regulation and long-standing norms.

Now some American politicians want caps on card interest rates, a tool that absolutely has its place in consumer protection. A handful of states already have strict limits on interest rates, a proud legacy of an ethos of protecting the most vulnerable people against the biblical sin of usury. Texas imposes a 10% cap for lending to people in that state.

Congress in 2006 chose to protect military service members via a 36% limit on interest they can be charged. In 2009, it banned an array of sneaky fees designed to extract more money from card users. Federal credit unions cannot charge more than 18% interest, including on credit cards. Brian Shearer from Vanderbilt University’s Policy Accelerator for Political Economy and Regulation has made a persuasive case for capping credit card rates for the rest of us too.

At the very least, there is every reason to ignore the stale serenade of the bank lobby that any regulation will only hurt the people we are trying to help. Credit still flows to soldiers and sailors. Credit unions still issue cards. States with usury caps still have functioning financial systems. And the 2009 law Congress passed convinced even skeptical economists that the result was a better market for consumers.

If consumers receive such commonsense protections, what’s at stake? Profit margins for banks and card networks, and there is no compelling public policy reason to protect those. Major banks have profit margins that exceed 30%, a level that is modest only compared with Visa and Mastercard, which average a margin of 45%. Meanwhile, consumers face $1.3 trillion in debt. And retailers squeeze by with a margin around 3%; grocers make do with half that.

The market won’t fix what’s wrong with credit card fees, because the handful of businesses that control it are feasting at everyone else’s expense. We must liberate the market from the grip of the major banks and card processors and restore vibrant competition. Harnessing market forces to get better outcomes for consumers, in addition to smart regulation, is as American as apple pie.

Fortunately, Trump has endorsed — via social media — bipartisan legislation, the Credit Card Competition Act, that would crack open the Visa-Mastercard duopoly by allowing merchants to route transactions over competing networks. Here’s hoping he follows through by getting enough congressional Republicans on board.

That change would leave us with the megabanks still controlling the credit card market. One approach would be consumer-friendly regulation of other means of credit, such as buy-now-pay-later tools or innovative payment applications, by including protections that credit cards enjoy. Ideally, Congress would cap the size of banks, something it declined to do after the 2008 financial crisis, to the enduring frustration of reformers who sought structural change. Trump entered the presidency in 2017 calling for a new Glass-Steagall, the Depression-era law that broke up big banks, but he never pursued it.

Fast forward nine years, and we find rising negative sentiment among American voters, groaning under the weight of credit card debt and a cascade of junk fees from other industries. Populist ire at corporate power is rising. The race between the two major parties to ride that feeling to victory in the November midterm elections and beyond has begun. A movement to limit the power of big banks could be but a tweet away.

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Carter Dougherty is the senior fellow for anti- monopoly and finance at Demand Progress, an advocacy group and think tank.

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