Credit Card Interest Caps, Workplace Flexibility, Inflation Moderate

Hey everybody, it's Gene Marks, and welcome back to another episode of the weekly Paychex Thrive Week In Review podcast. This is where we take a few items in the news that impacts your small business and mine and we talk about it a little bit.

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All right. The first item of news this week and it's very, very current has to do with credit card mandates. President Donald Trump – and this report comes from AP News – has given the credit card industry till this week to implement a 10% cap on interest rates, but with just days left, there’s still no clarity on enforcement or consequences for noncompliance.

The White House hasn't outlined how the cap would be carried out, leaving banks and lawmakers and consumer advocates uncertain. Supporters say the cap could save Americans roughly $100 billion in interest annually, but critics, including major banks like JPMorgan and Citigroup, wanted, er said that it could hurt profitability, reduce consumer credit access, and dampen rewards programs. Congressional support remains weak, so the plans feasibility still remains unclear.

There was a great opinion piece I wanted to point out to you at the Small Business and Entrepreneurship Council. It's sbecouncil.org, and it did point out that mandates on credit card routing and proposed caps on interest rates would harm small businesses, startups and consumers. It asserts that such policies often have unintended consequences, reducing access to credit and increasing costs. The article cites proposed legislation that I just discussed from President Trump, and the author of the article emphasizes the importance of credit availability for entrepreneurs and warns that price controls discourage lending and economic growth.

So, are you a fan of lower interest rates on your credit cards? For starters, let's be clear, many small businesses use credit cards for short-term financing. It is a very, very common thing, and credit card financing can be a really helpful thing to do. I am not averse to using a credit card to finance your business, as long as you are paying down your debt in some type of timely manner. Remember, when you hear interest rates of 20 to 30 percent – those are annual rates – they are certainly high, but if you are paying down this debt in two or three months, even at that high annual rate, it is still something that you can digest. And if it's money that’s needed for purposes – working capital or short-term purchases – to me it makes great sense, and I think it's really good.

Now, will capping these interest rates have an impact on your bottom line? Well, if you are paying a lot in interest for credit card debt, that is a problem right there with your cash flow. So, I would have to say to you that you shouldn't be so worried about high interest rates or them being capped, you should be more concerned with avoiding the long-term rates on credit card finances, which means getting financing from somewhere else or frankly not spending the money because using credit cards for long-term financing is really, really not a great way to manage your cash flow.

So, restricting those interest rates, I think for people that are running their businesses the right way, I don't think will have an impact on them whatsoever. I think if it does have an impact on you, I think you may want to talk to your accountant or your financial advisor about what you're doing to manage your cash because you shouldn't be paying anything ideally in credit card interest or at least a much smaller amount because of the way that again you are managing your cash.

And I'm also not a big fan of price controls, so anything that limits any private organization – banks or whatnot – from charging what the market will bear, well you know, I'm not a big fan of the government getting involved in that.

So, that's the story with credit card caps we're going to find out more after this week as to where this is going and what businesses may or may not be affected.

All right, another article this week in CPAPracticeAdvisor.com talked about work flexibility. The report is that work flexibility has declined as employers are tightening their workplace control. Working mothers are feeling it the most. The article reports on a decline in workplace flexibility across U.S. employers, highlighting how tightening return-to-office policies and control measures are affecting workers, especially working mothers.

Based on survey reports like Live Career’s Motherhood on Mute, it finds that parenthood is often seen as a professional liability, forcing women to downplay caregiving responsibilities. Mothers are overperforming to counter bias and making career choices around childcare constraints. The loss of remote and flexible work options are contributing to challenges in balancing work and family life, underlining broader trends towards more rigid workplace expectations, even as employees increase prioritized flexibility.

So, here's my advice for you if you are considering PTO policies and flexibility policies. Other than health insurance or retirement plans, flexibility remains in the top three of employee requested benefits. Numerous surveys have reported this. It's really, really important that our employees have a good work-life balance.

My advice to you as a business owner regardless of the business that you're in – retail services, construction, manufacturing, makes no difference – you really should work out a good flexible time program with your employees that not only gives the ability to take an hour or two off if they need to because they have to care for their children or even an older loved one but, also, pays respect to the fact that you need them to be at their desk or in the office or on the production floor to get work done. There is a balance to be achieved here but we as employers need to be more open for that balance. Many of us are over the age of 60. In fact, the grand majority of business owners are around 60 years old, according to the Small Business Administration, so we come to our businesses with sort of an older school mentality, but younger generations, they really value flexibility.

And you know what? They're not wrong. So, if you do have working mothers working for you, I really suggest that you talk to them directly. I suggest you talk to all of your employees directly. I suggest that you revisit your work-from-home policies, your PTO policies, even your workweek, four-day workweek potential policies, as well. There has to be a middle ground of flexibility and also making sure that work gets done, and with today's technology and the ability to do things remotely I do believe that working that working compromise can be reached.

So, more people are seeing a decline in their workplace flexibility. I think that's the wrong direction to go you want to look for a middle ground.

Finally, this report comes from the Wall Street Journal, and it has to do with inflation. It's our big economic news from last week. Consumer prices were up 2.7% year over year. According to the Wall Street Journal, U.S. consumer inflation ended 2025 at a stable rate, with the consumer price index rising 2.7% year over year in December, matching November's pace. Core inflation that excludes food and energy was 2.6%.

The report suggests inflation pressures remain moderate despite economic uncertainty from tariffs and slower job growth. The Federal Reserve's recent rate cuts gave it flexibility to maintain its current policy stance as price increases and necessities like housing, health care and groceries continued. Economists see the steady inflation is offering the Fed breathing room, but elevated costs still strain households as policymakers watch early 2026 trends closely.

The continuing debate over affordability will go throughout 2026. As we've seen from the most recent Small Business Employment Watch report from Paychex, hourly wages have increased less than 3% year over year, something like around 2.7%. So, they are barely keeping up with inflation, and it is true that there are some grocery costs that have increased even more.

So, we have to be cognizant of that with our employees. Yes, some of the big-ticket items, a lot of the things here are indicating that inflation is still under control. Remember, the long-term historical rate of inflation is anywhere from 2.5 to 3%. So, we're really not in a bad spot when it comes to inflation, although affordability for some is always going to remain a factor.

What type of an increase should you be giving your employees this year? That's something that I hope we'll cover in future episodes of this podcast, but right now I can tell you that most of my clients are still looking at anywhere from 3 to 6% salary workers, increases actually both for salary and hourly employees in 2026. That is anecdotal from my client base.

I'll look at some studies and get back to you guys in a future episode as to what some of the other increases are being done by more comprehensive surveys. Anyway, the good news is, is that the pace of inflation has held steady in December at 2.7%.

You've been watching and or listening to this week's episode of the Paychex Thrive Week in Review. My name is Gene Marks. Remember, if you need any help or advice or tips in running your business, please sign up for a Paychex Thrive newsletter. Go to paychex.com/thrive. You will get back episodes of this podcast as well as other advice for helping you run your business better.

Thanks for joining us. We will see you again next week with another episode of the Paychex Thrive Week in Review. Again, I'm Gene Marks. We'll see you then. Take care.

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