Credit card issuers hit as Trump looks to cap interest rates
The share price of American Express fell by 4% while Visa and Mastercard's dropped more than 2% following President Donald Trump’s mandate for a 10% one-year cap on credit card interest rates.
Other US lenders including JPMorgan Chase and Bank of America also saw their shares open more than 1% lower as Trump re-iterated an idea he put forward during his 2024 presidential campaign to limit credit card rates to address the cost of living concerns of many Americans.
The announcement carries implications around the world. In the UK, for example, around £8bn (US$10.8bn) was wiped from the market value of the country’s banks by the middle of Monday 12 January local time.
Revealing his plan on Truth Social, President Trump writes: “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.
“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%.”
Trump also used Truth Social to say he was directing mortgage giants Fannie Mae and Freddie Mac to buy $200bn worth of mortgage bonds — a move that immediately rippled through financial markets, sending mortgage rates plunging.
The Dow Jones Industrial Average plunged by just over 1% on opening before recovering.
Battle of wills
Critics question how the cap will be introduced or whether it will be legally enforceable, though the President has told journalists that he will force credit card companies to comply.
The move may also make it harder for people with a weaker credit record to access credit.
“I think President [Trump’s] goal of reducing credit card interest rates is a worthy and important one,” says hedge fund manager Bill Ackman on X. “My concern about capping rates at 10% is that doing so will inevitably cause millions of Americans to have their cards cancelled as credit card companies lose the ability to adequately price subprime credit risk.”
Others point to the record US credit card debt pile, which hit $1.2trn in the third quarter of 2024. The average interest rate is around 20%, so the reduction brought by the cap would be significant.
Forcing companies to lower their lending rates would "upend the basic economics of the industry," says Matt Britzman, senior equity analyst at Hargreaves Lansdown, speaking to the BBC.
"Most banks would respond by cutting credit limits, closing riskier accounts, and scaling back rewards programmes, because they simply couldn't cover losses at that price point."
Wells Fargo analysts have cautioned that the cap could “wipe out earnings from cards for a year”.
The move could also drive consumers who are shut out of credit cards towards less regulated alternatives.
In February 2025, senators Bernie Sanders and Republican Josh Hawley proposed legislation that would cap credit card interest rates at 10%, but it has not been enacted into law.
Trump’s often unexpected decisions have caused sudden stock market movements on a number of occasions. For example, global markets reacted with pronounced volatility as investors processed the implications of the Trump administration's new tariff regime.
The intended start date for the cap is 20 January, the anniversary of Trump’s inauguration.
Social and economic consequences
Forcing companies to lower their lending rates would "upend the basic economics of the industry," says Matt Britzman, senior equity analyst at Hargreaves Lansdown, speaking to the BBC.
"Most banks would respond by cutting credit limits, closing riskier accounts, and scaling back rewards programmes, because they simply couldn't cover losses at that price point."
Wells Fargo analysts have cautioned that the cap could “wipe out earnings from cards for a year”.
The move could also drive consumers who are shut out of credit cards towards less regulated alternatives.
In February 2025, senators Bernie Sanders and Republican Josh Hawley proposed legislation that would cap credit card interest rates at 10%, but it has not been enacted into law.
Trump’s often unexpected decisions have caused sudden stock market movements on a number of occasions. For example, global markets reacted with pronounced volatility as investors processed the implications of the Trump administration's new tariff regime.
The intended start date for the cap is 20 January, the anniversary of Trump’s inauguration.
