Visa and Mastercard Stocks Tumble as Trump Targets Credit Card Interest Rates

TLDR

• President Donald Trump called for a one-year cap on credit card interest rates at 10%, set to begin January 20, 2026.
• Major bank stocks dropped in premarket trading Monday, with Citi falling nearly 4%, JPMorgan down 3%, and Bank of America declining 2.45%.
• Trump made the announcement on Truth Social Friday, stating Americans are being “ripped off” by credit card companies charging rates between 20-30%.
• Analysts say the president lacks authority to impose the cap unilaterally and such a move would require congressional approval, with legislative risk considered relatively low.
• Financial experts warn a rate cap could force banks to tighten credit standards and reduce access to credit for higher-risk borrowers, potentially benefiting buy-now-pay-later services like Affirm and SoFi.

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President Donald Trump announced plans for a temporary cap on credit card interest rates over the weekend. The proposal triggered immediate market reactions on Monday morning.

Trump posted on Truth Social Friday that he wants to implement a 10% ceiling on credit card interest rates. The cap would take effect on January 20, 2026, and last for one year.

Major banking stocks fell in premarket trading following the announcement. Citi Group shares dropped nearly 4% before markets opened. JPMorgan Chase declined 3%, while Bank of America fell 2.45%.

Payment processing companies also saw declines. Visa stock decreased 1.58% and Mastercard dropped 2%. Wells Fargo lost 2% in premarket trading.

Trump’s post stated that Americans are being “ripped off” by credit card companies. Current credit card interest rates typically range between 20% and 30%. The president said his administration will not allow this practice to continue.

The announcement echoed a campaign promise Trump made during the 2024 presidential race. However, the Friday post did not include specific details about implementation. No information was provided about how the policy would be enforced.

Legal Questions Surround Proposal

Analysts at Raymond James said the president does not have the power to impose an interest rate cap on his own. Ed Mills and his team noted that such limits would require Congress to pass legislation.

The analysts described the risk of congressional action as “relatively low.” However, they acknowledged the risk increased after Trump’s public statement. They expect the banking industry to push back strongly if the proposal moves forward.

Financial experts warn the cap could have unintended effects on credit availability. Banks might tighten lending standards if they cannot charge rates that reflect borrower risk. This could reduce credit access for people with lower credit scores.

Raymond James analysts said banks would likely argue the cap hurts the consumers it aims to help. They identified the chairmen of the House Financial Services Committee and Senate Banking Committee as key figures to watch.

Alternative Lenders Could Benefit

Mizuho analyst Dan Dolev suggested the proposal could help alternative lending platforms. If banks reduce lending to lower-credit borrowers, these customers might turn to buy-now-pay-later services. Companies like Affirm, Upstart, SoFi Technologies, Block, and PayPal could see increased demand.

Dolev noted that average U.S. credit card interest rates are around 20%. More than half of American consumers have FICO scores below 745, where borrowing costs are higher.

Capital One shares fell the hardest among major issuers, dropping nearly 9% in premarket trading. Barclays declined 2.5% and American Express dropped 4.4%. The proposal affected both U.S. and international financial institutions with credit card operations.

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