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Bank Stocks Drop After Trump Proposes 10% Cap on Credit Card Interest Rates

2026-01-12

The BareStory

Shares of major financial institutions fell in premarket trading on Monday following a call by U.S. President Donald Trump to cap credit card interest rates at 10%. Capital One shares dropped 10%, while American Express declined nearly 5%. Other major lenders, including Citigroup, JPMorgan Chase, Visa, and Mastercard, also saw their stock prices decrease.

President Trump announced the proposal on social media on Friday, stating that the cap would become effective on January 20, 2026, and asserting that the American public should no longer be "ripped off." Speaking to reporters on Sunday, Trump added that banks failing to limit rates would be "in violation of the law," although he did not provide specific details on how the measure would be implemented.

In contrast to the banking sector, shares of buy-now-pay-later companies rose, with Affirm Holdings jumping 5% and PayPal gaining 1%. Critics of the proposal have warned that if enacted, the plan could cause banks to pull back on lending, potentially causing consumers to lose access to credit. Any mandatory cap on interest rates would require approval from Congress.

Left Perspective

  • The initiative aims to protect consumers from perceived financial exploitation.
  • Non-compliance with the proposed rate limit would be treated as illegal.
  • A specific implementation date has been set for early 2026.

Right Perspective

  • Financial institution stocks declined significantly in response to the news.
  • Critics warn that the cap could reduce consumer access to capital.
  • Legislative hurdles remain before the policy can be enforced.

How it may affect me

As a U.S. reader:

• If approved by Congress, you could see credit card interest rates capped at 10% beginning in January 2026, potentially reducing costs if you carry a balance.

• You might face stricter borrowing requirements or reduced access to credit cards if banks curtail lending to mitigate revenue losses, as warned by industry critics.

• Investors with portfolios containing financial sector stocks may experience volatility, as traditional bank shares have declined while buy-now-pay-later company stocks have risen.

• Immediate changes to your current interest rates are unlikely, as the proposal requires legislative approval from Congress before it can be enacted or enforced.

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