The stock market took a sharp dive on Monday after President Donald Trump announced a bold proposal to cap credit card interest rates at 10% starting in 2026. What followed was a swift panic in the financial sector, with major players like Capital One, Visa, and JPMorgan Chase taking significant hits.
Trump’s announcement on Truth Social claimed that credit card companies were “ripping off” Americans by charging interest rates ranging from 20% to 30%. He promised that, under his plan, interest rates would be capped at 10% to ease the financial burden on consumers. It didn’t take long for the markets to react, with credit card stocks plummeting in pre-market trading. Synchrony Financial, a company heavily invested in credit cards, dropped more than 9%, and other companies like Capital One saw their stock prices fall between 6% and 9%. American Express wasn’t spared either, with its shares declining by 3.6%.
It’s not just the credit card companies taking the hit—big banks with substantial credit card operations, such as Citigroup, JPMorgan Chase, and Bank of America, also saw significant stock drops. Even payment giants like Visa and Mastercard weren’t immune, both slipping nearly 2%.
The fear, analysts say, is that Trump’s proposal could drastically disrupt the credit card business, slashing profits and forcing companies to tighten credit rules. With fewer people qualifying for credit cards, analysts warn that consumer spending could drop, slowing account growth and potentially putting millions of consumers at risk of losing access to credit.
Analysts aren’t entirely convinced the proposal will ever make it past Congress. Raymond James’ Ed Mills noted that Trump, by himself, can’t impose such a cap—he would need Congress to pass the measure. In fact, other experts believe the plan is “dead on arrival” due to the lack of bipartisan support. Even so, the mere fact that Trump is pushing this idea has added an element of risk in the market, raising concerns about what would happen if the proposal gains traction.
Despite the low likelihood of the plan passing, the market’s panic is real. Truist analyst Brian Foran warned that a rate cap could push the credit card business to the edge of unprofitability, particularly hurting subprime credit cards. These are the cards that serve consumers with less-than-ideal credit scores, and any cap would make it even more difficult for banks to profit from these high-risk borrowers.
Foran also pointed out that smaller, more vulnerable companies like Synchrony Financial and Bread Financial would be hit hardest by the cap. These companies are deeply reliant on credit cards for their business model, meaning a forced rate reduction could wipe out a significant portion of their revenue. Capital One would also face substantial damage, but to a lesser extent.
In contrast, some experts believe that alternative lenders could benefit from the fallout. With credit card companies potentially tightening their lending standards, borrowers with lower credit scores might turn to buy-now-pay-later services or personal loan companies. Companies like Affirm, Upstart, and SoFi could see a surge in business, as their services are often more accessible to those with imperfect credit histories.
Despite the uncertainty of whether Trump’s proposal will even make it to a vote in Congress, the effects of his call for a credit card rate cap have already sent shockwaves through the market. With investors closely watching the situation unfold, the key question now is whether the plan gains any real political momentum or if it fades into the background like other proposals before it.
What’s clear is that the market is on edge. Whether Trump’s credit card rate cap is a game-changer or just another political gambit remains to be seen, but the ripple effects are already being felt across the financial sector. Only time will tell whether this plan will help consumers or leave them caught in the crossfire of a deeply divided political system.
As the clock ticks down to 2026, the financial industry is bracing for what could be a volatile and uncertain future. Could the president’s push for a credit card rate cap signal a shift in American consumer lending? Or is this just another idea that will never leave the political stage? Only the coming months—and perhaps the outcome of the 2024 election—will reveal the answer.
