Major credit-card issuers are experiencing downward pressure in share prices following renewed speculation about a proposed 10% cap on interest rates. Despite the market reaction, analysts remain skeptical that such a policy will be enacted.
- Credit-card issuer stocks declined 6.3% on average over five days
- American Express (AXP), Capital One (COF), and Discover (DFS) each fell over 7%
- Proposed 10% interest rate cap could reduce average APRs by 12 percentage points
- Capital One’s Q4 2025 net interest margin was 17.4%
- Analysts assess the 10% cap as highly unlikely to pass in 2026
- Sector-wide earnings are projected to grow 4.8% in 2026 assuming no regulatory change
Shares in top credit-card issuers have declined by an average of 6.3% over the past five trading days, with American Express (AXP), Capital One (COF), and Discover Financial (DFS) posting losses exceeding 7% each. The downturn follows reports that former President Donald Trump has revived calls for a federal cap on credit-card interest rates at 10%, a proposal that could significantly alter the profitability of card lending operations. The proposed 10% rate ceiling would apply to all new and existing credit-card accounts, according to the draft framework circulating in political circles. Under current conditions, average annual percentage rates (APRs) on credit cards range from 18% to 25%, with high-risk borrowers often facing rates above 29%. A shift to a 10% cap would reduce the weighted average rate by approximately 12 percentage points, directly impacting net interest margins. For instance, Capital One reported a net interest margin of 17.4% in Q4 2025, which would be severely compressed under the proposed rule. Analysts at Jefferies maintain that legislative adoption of the cap is unlikely, citing significant opposition from financial industry lobbying groups and the absence of bipartisan support. They estimate that even if the policy were introduced, it would face legal challenges and procedural hurdles in Congress, making passage within the next 18 months improbable. Meanwhile, credit-card companies continue to adjust their risk models, with some signaling a potential slowdown in new account growth to mitigate future regulatory exposure. Investors are closely monitoring Federal Reserve commentary and upcoming legislative sessions for any indication of regulatory shift. The market’s reaction underscores concerns about earnings sustainability, particularly for companies with high concentrations in unsecured lending. However, current projections indicate that full-year 2026 earnings for the sector could still grow by 4.8%, assuming no material changes to rate policy.