US Bank And Card Issuer Stocks Slide After Donald Trump Calls For 10% Credit Card Rate Cap

Markets reacted sharply as shares of major US card issuers and banks, including American Express, dropped. This followed President Donald Trump calling for a 10% interest rate cap for one year.

Specifically, American Express shares slid about 4.28% to $359, while Capital One fell 6.4%, marking its largest drop in nine months. Meanwhile, American Express Co shares have declined 5.33% over the past five trading days.

Other major banks also suffered losses, with Citigroup down 3%, Wells Fargo easing 1%, and Synchrony Financial tumbling 8.4%.

Experts warned that the proposed cap could wipe out billions in industry profits and potentially restrict consumer lending.

Even payment companies such as Visa and Mastercard, which do not issue credit cards, felt the impact due to their reliance on transaction fees.

President Trump set a January 20 deadline for compliance, threatening ‘very severe things’ for companies that fail to lower rates to 10%.

He explained, “I want a cap on credit card interest rates because some of them are 28 — almost 30 per cent. People don’t know they’re paying 30 per cent (credit card interest rates).”

Additionally, Trump added, “The people out there are working, and they have no idea that they’re paying 30%. We are putting a one-year cap at 10%, and they know it. They have really abused the public. I am not going to let it happen.”

Groups such as the Bank Policy Institute and the Consumer Bankers Association endorsed more affordable credit.

They cautioned that a 10% cap could reduce credit availability and harm consumers and small businesses that rely on cards.

Analysts also noted that enforcing the cap would require new legislation from Congress. They added that this appears unlikely given the banking sector’s strong lobbying power.

Observers pointed out that Trump’s announcement comes as the US heads toward midterm elections. This follows his warnings to Republican aides of possible impeachment if the midterms are lost.

Overall, the proposed credit card rate cap has rattled US financial markets. It underlines tensions between consumer protection measures and banking industry profitability.

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