Shares of Capital One (COF) and Synchrony Financial (SYF) fell as much as 10% in on Monday. American Express (AXP) and Citigroup (C) shares were down about 4%, while JPMorgan Chase (JPM) and Bank of America (BAC) shares were off closer to 2%.
“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 wrote Friday night in a post on Truth Social.
It’s not clear how Trump plans to cap card fees without executive order, voluntary action or Congress first passing legislation, according to Goldman Sachs. But the president doubled down on his proposal on Sunday while speaking with reporters on Air Force One as he returned to D.C. from Florida.
Only the latter would work - but it would effectively kill off credit cards for the vast majority of holders. Credit cards would quickly become a luxury only the wealthy and the 750+ credit users can retain.
Credits cards are capped under fed law on the fees they charge businesses so if you then cap what they can charge customers, the only way to “discriminate” a profit is by getting rid of customers.
Or, I guess every credit card can start charging a significant annual fee (which is not currently regulated by the fed). Either way, lots of unintended consequences.
“If this is enacted—and that’s a big if, though part of me hopes it is—we would likely see a significant contraction in industry credit card lending. Credit card issuers simply won’t be able to sustain profitability at a 10% rate cap,” Noto wrote.
SoFi personal loan rates currently range from about 8.74% to 35.49%,
I’m long V. The interest cap would not directly affect V. V skims a small percentage of every transaction (up to 3.5%). It’s the banks that charge the interest rates and annual fees. They will be VERY unhappy.
Indirectly, V (and others) would feel a pinch if this resulted in declining credit card use. But the proposed cap would not directly affect them since they don’t get a slice of the interest rate (or annual fee).
True. I don’t watch day-to-day (LTBH here). At least part of this is a misunderstanding of how V gets paid. Institutional players should know, but guys like me may or may not know. Many of them probably don’t.
It’s also just a knee-jerk reaction. Can you imagine if Congress actually tried to pass that law? It probably will never come to a vote. Too many congresspeople are owned by too many banks. POTUS can’t just EO that. It will never hold up in court.
I would favor some sort of cap. Ten percent is pretty arbitrary. At the very least, it should be linked to the Fed rate (i.e. cost of borrowing). Maybe also your credit rating (I’d be open to discussing that, at least). A 29% rate is usurious, and seems almost designed to get people into a hole and keep them there.
Is it? I mean, making loans under a credit card is risky stuff. You suffer losses of just under 10% each year from fraud. You suffer some non-trivial amount of default every year under good times, and once or twice a decade you get a recession that pushes your write-off rate to…what, 7-8%? To say nothing of the fact that half your cardholders clear their balances monthly, so they pay no interest. Seems like you’d have to earn north of 20% interest on the folks who do run a balance in order to make up for the fraud and defaults and the interest-free loan on half your capital….
The one write-off that happens every year for significant portion of our population regardless of credit is due to death. Credit cards can make a claim against an estate but if there is no estate (or the estate is too small to go through probate), then the banks often have to eat that debt.
I had a client start to cry when I told her that she would not have to pay for her husband’s $23k in credit card debt because while she was an authorized user of the card, she was not a co-signer, but she was the one racking up all the debt. He had almost no assets in his name because he was in a nursing home on Medicaid. The bank had to eat that debt. The bank had turned off the card when they were notified that he had died so she now had to get a card in her name (but ironically, had no credit file because all her purchases were under his name/file).
