Credit card stocks sink after Trump proposes interest rate cap
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Financial stocks tumbled Monday after President Trump called for capping interest rates on credit cards.
Why it matters: An interest rate cap might help consumers who carry balances, but it would bludgeon bank earnings.
The latest: A legion of credit card stocks suffered in the wake of Trump's announcement:
- Capital One was down 6.2% shortly before 11:30am ET, while Synchrony Financial fell 8.2%.
- JPMorgan Chase, Citigroup, Wells Fargo and Bank of America were down 2%, 3.5%, 1.7% and 1.5%, respectively.
- American Express fell 4.4%, while credit card processors Visa (-1.4%) and Mastercard (-1.9%) also declined.
Driving the news: "Please be informed that we will no longer let the American Public be 'ripped off' by Credit Card Companies that are charging Interest Rates of 20 to 30%, and even more," Trump said Friday on Truth Social.
- He said he was calling for "a one year cap on Credit Card Interest Rates of 10%."
- Trump said the cap would be "effective January 20," and on Sunday claimed lenders would be "in violation of the law" if they did not comply.
The big picture: The average annual percentage rate on credit cards ballooned from 12.9% in 2013 to 22.8% in 2023, according to Consumer Financial Protection Bureau data published before Trump moved to shut down the agency.
- The American Bankers Association said in a statement that "we share the President's goal of helping Americans access more affordable credit," but but warned a 10% rate cap would shrink credit access and hurt the consumers and small businesses the proposal is meant to help.
Reality check: Trump may not be able to impose a cap on card rates without legislative action.
Yes, but: Capping rates has been a longstanding aim of progressives like Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-NY), making for strange political allies.
- Progressives reacted to Trump's proposal with skepticism.
- "Begging credit card companies to play nice is a joke," Sen. Elizabeth Warren (D-Mass.) said in a statement. "I said a year ago if Trump was serious I'd work to pass a bill to cap rates. Since then, he's done nothing but try to shut down the CFPB. Trump doesn't care about affordability. Americans know a fraud when they see one."
