Shares of banks and credit card companies dipped after former President Donald Trump suggested capping credit card interest rates at 10%. He posted about it on Truth Social, hoping to limit these rates for a year starting January 20, 2026. However, he didn’t explain how this would work or if it would even be legal.
Following his announcement, stocks for major credit card firms like American Express, Visa, and Mastercard fell. Barclays, a UK bank with a significant US card presence, also experienced a drop.
Banking associations in the US have voiced strong opposition to this cap. They argue it could make it tougher for many people to get credit and may severely impact families and small businesses. Currently, the average credit card interest rate in the US stands at around 20%.
In his statement, Trump mentioned that if credit card companies did not comply with the cap, they would be “in violation of the law.” The potential impact of this proposal is significant. Matt Britzman, a senior equity analyst at Hargreaves Lansdown, warned that banks would likely respond by lowering credit limits or cutting rewards programs, as they couldn’t sustain losses at such low rates.
Recent statistics shed light on the credit landscape in the US. According to a survey by the Federal Reserve, nearly half of US households carried credit card debt in 2022, with an average balance exceeding $6,000. This means many people could face around $100 in monthly interest payments given current rates.
The idea of capping interest rates has garnered support from a mix of lawmakers, from progressive figures like Bernie Sanders to Trump supporters. However, putting this proposal into practice seems complicated. Past bills aiming for similar caps have stalled in Congress, and the current administration has sought to reduce the power of agencies traditionally involved in such regulations.
Senator Elizabeth Warren has criticized Trump’s approach, stating that simply asking credit card companies to be fair is naive. She noted that even if Trump meant to enact this policy, he hasn’t taken concrete steps to do so.
Many analysts predict any executive action taken by the White House would face legal challenges from the credit card industry, which has historically resisted regulation in court.
A statement from several banking bodies expressed a shared goal of making credit more affordable but warned that a rate cap could backfire, reducing credit availability for many consumers. They cautioned that it might push people towards less-regulated and more expensive alternatives.
In the past, Sen. Sanders and Sen. Josh Hawley proposed legislation to cap credit card rates at 10% for five years, but it has yet to pass. Also, earlier this year, the Trump administration attempted to repeal a regulation that limited late fees on credit cards, a rule aimed at reducing what some call “junk fees.”
As discussions around credit card rates heat up, it highlights a significant divide between those advocating for consumer protection and the financial industry’s focus on maintaining profitability. The outcome of this debate will potentially impact millions of Americans and their access to credit.
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