US Bank Stocks Drop As Trump Proposes Credit Card Interest Rate Cap
US bank stocks are sliding after President Trump proposed a cap on credit card interest rates.
Shares of major banks including Citigroup, JPMorgan Chase, Wells Fargo and Bank of America fell between 1% and 3%.
Card-focused companies such as Visa, Mastercard and American Express also declined, while Capital One dropped nearly 7%.
Trump said late Friday that credit card interest rates would be capped at 10% for one year beginning January 20th, though the enforcement mechanism remains unclear.
Said an industry trade group of the proposal in a joint statement,
“Evidence shows that a 10% 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.”
The proposal sparked alarm across the banking industry, with executives and analysts warning it would render large portions of the credit card business unprofitable, particularly for borrowers with weaker credit profiles. The average US credit card interest rate currently stands at 19.7%, with rates for subprime and store-branded cards significantly higher, according to the report.
Industry insiders say banks would likely respond by sharply restricting access to credit, scaling back rewards programs and pulling products from higher-risk consumers rather than offering loans at a loss. Reduced credit availability could also curb consumer spending and push borrowers toward other forms of unsecured debt.
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