Former President Donald Trump has revived a contentious policy idea by calling for a federal cap on credit card interest rates at 10% annually, a move that could reshape consumer lending and impact major financial institutions. The proposal has triggered immediate scrutiny from investors and regulators alike.
- Trump proposes a 10% annual cap on credit card interest rates, down from an average of 22.3% in late 2025.
- JPM, C, MA, and V are major financial institutions potentially affected by reduced interest income.
- Market reaction included 1.2% to 1.8% declines in shares of JPM, C, MA, and V following the announcement.
- The policy could lead to tighter credit access, higher fees, or reduced rewards as issuers adapt.
- Impact on consumer spending and sectors like retail and entertainment (e.g., DIS) is a growing concern.
Former President Donald Trump has re-entered the national policy debate with a call for a hard cap on credit card interest rates at 10% per year, a significant reduction from current average rates exceeding 22%. The proposal, announced during a campaign rally in January 2026, aims to reduce consumer debt burdens but raises concerns about the long-term viability of credit card operations for major issuers. The 10% rate would represent a near 55% decline from the average APR on new credit card accounts, which stood at 22.3% in late 2025. If enacted, the cap could directly affect the profitability of card-issuing banks such as JPMorgan Chase (JPM), Citigroup (C), and Mastercard (MA), which rely heavily on interest income from revolving credit. Visa (V), with its vast transaction network, would also face altered revenue dynamics, particularly in its payments and credit segments. Market reaction was swift: JPM shares dropped 1.8% the day after the announcement, while C and MA each saw declines of 1.2% and 1.5%, respectively. Investors are pricing in the risk of reduced net interest margins and potential regulatory tightening. The proposal could also pressure the Federal Reserve’s forward guidance, especially if it signals broader consumer protection measures ahead of the 2028 election cycle. Consumer advocates have welcomed the move, arguing it would help low- and middle-income households manage debt. However, banking analysts warn that such a cap could lead to tighter credit access, higher fees, or reduced rewards programs—trade-offs that may disproportionately affect responsible borrowers. The impact on discretionary spending and consumer confidence, particularly in sectors like retail and entertainment (e.g., DIS), remains a key concern for economic forecasters.