Credit Card Stocks Fall on Trump’s Interest Rate Cap Proposal

While the plan might squeeze credit card issuers, advocates say it would benefit average consumers.

U.S. dollar bills and credit and debit cards in Washington on Oct. 4, 2024. Madalina Vasiliu/The Epoch Times

Shares of credit card companies fell on Jan. 12 amid President Donald Trump’s proposal to cap interest rates.

Capital One declined by 6 percent, and American Express dropped by 4 percent. Shares of Visa and Mastercard fell by more than 2 percent.

The big banks slipped to kick off the trading week; Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo slid by as much as 4 percent.

Buy-now-pay-later stocks also slumped. Shares of Affirm Holdings and Klarna declined by 4 percent and 2 percent, respectively.

In a Jan. 9 Truth Social post, the president proposed a one-year cap on interest rates, effective Jan. 20, reviving a 2024 election campaign idea.

“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 [percent], and even more, which festered unimpeded during the Sleepy Joe Biden Administration,” Trump said.

Under the plan, credit card issuers would be subject to a 10 percent limit on the rates they can charge clients.

The average interest rate for a new credit card today is almost 24 percent, according to LendingTree.

Trump stopped short of determining whether to use an executive order or rely on Congress to pass legislation.

Speaking to reporters aboard Air Force One on Jan. 11, the president said that if banks were to not limit their interest rates, they would be “in violation of the law.”

Tom Essaye, president and cofounder of the Sevens Research Report, warned that Trump’s announcement last week poses a risk to U.S. financial markets in the year ahead.

“Government policy chaos negatively impacts business investment or earnings,” Essaye said in a note emailed to The Epoch Times.

Although these types of declarations still need to become law, they do “influence corporate behavior, so we need to watch that closely, especially if government influence/involvement in the industry continues to rise,” he said.

“I do think this is a risk we need to monitor going forward because the lack of market reaction to this policy uncertainty seems to be emboldening the administration. So far, markets have weathered it thanks to positive offset,” he said.

Debating Rate Caps

Although the plan might squeeze credit card issuers, advocates say it would benefit average consumers.

In 2025, Sens. Josh Hawley (R-Mo.) and Bernie Sanders (I-Vt.) introduced a bill to cap credit card interest rates at 10 percent for five years.

Sen. Josh Hawley (R-Mo.) speaks to reporters on Capitol Hill in Washington on Oct. 9, 2025. Madalina Kilroy/The Epoch Times

Similar legislation was introduced by Rep. Alexandria Ocasio-Cortez (D-N.Y.) in the lower chamber.

“Working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon. It’s not just wrong, it’s exploitative. And it needs to end,” Hawley said in a statement at the time.

“Capping credit card interest rates at 10 [percent], just like President Trump campaigned on, is a simple way to provide meaningful relief to working people. Let’s do it.”

A September 2025 Vanderbilt study found that a 10 percent cap would save U.S. consumers $100 billion per year “without causing massive account closures.” However, researchers also noted that it might lead to “some reduction in lending to customers with FICO scores below 600.”

However, industry leaders pushed back against Trump’s measure, arguing it would have adverse effects on consumers and the broader U.S. economy.

A Jan. 10 joint statement by the American Bankers Association and four banking organizations warned that the move would reduce access to affordable credit for borrowers. Lenders would pull back on lending, and consumers would rely on unconventional alternative instruments.

“At the same time, evidence shows that a 10 [percent] interest rate cap would reduce credit availability and be devastating for millions of American families and small business owners who rely on and value their credit cards, the very consumers this proposal intends to help,” they said.

“If enacted, this cap would only drive consumers toward less regulated, more costly alternatives.”

Other research papers have found that, while caps may be popular, they generally lower the amount of credit extended, particularly for high-risk borrowers.

Several states across the country, including Arkansas, Illinois, and Oregon, have implemented variations of limits on credit card interest rates.

A January 2023 paper concluded, for example, that Arkansas’s 17 percent cap raised aggregate consumer costs, steered borrowers toward less suitable products, and tightened credit availability for the subprime segment most dependent on it.

Federal Reserve economists determined in July 2023 that the Prairie State trimmed access to credit for subprime borrowers by 38 percent, and eventually “worsened the financial well-being of many of these borrowers.”

On an international scale, the World Bank Group noted more than a decade ago that different types of rate caps on lending products did not lead to positive results.

“The paper finds at least 76 countries around the world currently use some form of interest rate caps on loans—all with varying degrees of effects, including the withdrawal of financial institutions from the poor or from specific segments of the market, an increase in the total cost of the loan through additional fees and commissions, among others,” the World Bank Group said in a 2014 paper.

Total credit card debt sits at $1.23 trillion, according to the New York Federal Reserve.

Aldgra Fredly contributed to this report.