Trump’s Plan to Cap Credit Card Costs Hits Bank Shares
Shares of banks and credit card companies have taken a dip following US President Donald Trump’s recent proposal to cap credit card costs. On Friday, Trump announced on Truth Social his intention to limit interest rates on credit cards to 10% for a year starting January 20, 2026. However, he did not clarify how this cap would be implemented or whether it would be legally enforceable.
– Stock Impact: In early trading, shares of major US credit card companies, including American Express, Visa, and Mastercard, showed declines, while Barclays, a UK bank with a significant US credit card operation, dropped 1.9% in London.
– Industry Concerns: US banking associations argue that capping interest rates could restrict access to credit and be “devastating” for many families and small businesses. Currently, the average interest rate on credit cards in the US hovers around 20%. Trump’s proposal seeks to cut it in half, reviving a similar suggestion he made during his 2024 presidential campaign.
– Trump’s Message: In his social media statement, Trump asserted, Effective January 20, 2026, I, as President of the United States, am calling for a one-year cap on Credit Card Interest Rates of 10%. Please be informed that we will no longer let the American Public be ‘ripped off’ by Credit Card Companies.
– Reactions from Trump: While speaking to reporters aboard Air Force One, Trump claimed that credit card companies would be “in violation of the law” if they did not comply with his demands. The impact was immediate, with American Express shares dropping nearly 4%, and Visa and Mastercard losing over 2%. Other major US banks, such as JPMorgan Chase and Bank of America, also experienced a decline in share prices exceeding 1%.
Economic Implications of Capping Credit Card Rates
Analysts warn that enforcing such a cap could significantly disrupt the credit industry.
– Matt Britzman, a senior equity analyst at Hargreaves Lansdown, stated that reducing lending rates would upend the basic economics of the industry. Banks might respond by lowering credit limits, closing riskier accounts, and cutting back on rewards programs, unable to manage losses at those lower rates.
– Consumer Debt Stats: As per the Federal Reserve’s 2022 survey, nearly half of US households carried credit card debt, with the average balance exceeding $6,000. With interest rates at around 20%, this translates into approximately $100 in monthly charges.
Bipartisan Support for Capping Credit Card Interest Rates
The idea of capping credit card rates has garnered support from an unexpected coalition of lawmakers, merging voices from the left, like Bernie Sanders, with those backing Trump’s MAGA agenda. Nevertheless, the feasibility of enacting these changes remains questionable.
– Past Legislative Efforts: In early 2022, Senators Sanders and Josh Hawley proposed a bipartisan bill aiming to cap credit card interest rates at 10% for five years, but it has not yet been enacted.
– Democratic Response: Senator Elizabeth Warren remarked, “Begging credit card companies to play nice is a joke.” She cited her previous willingness to collaborate on a bill if Trump was serious, while noting his administration’s efforts to undermine the Consumer Financial Protection Bureau (CFPB).
– Potential Legal Challenges: Analysts anticipate that any executive action from the White House would likely face legal challenges from the financial industry, which has a history of successfully contesting regulations in court.
Industry Stance
A coalition of five US banking bodies expressed alignment with the president’s goal of enhancing accessible credit. However, they cautioned that the proposed cap would actually reduce credit availability and be devastating for millions of American families and small businesses who rely on credit cards. They concluded that such a cap might push consumers towards less regulated and more expensive alternatives.
As the debate over Trump’s proposed credit card interest cap unfolds, its potential implications for consumers, businesses, and the overall economy continue to raise concerns.