Bank stocks brace for impact after Trump calls for 10% cap on credit-card interest rates

Core Viewpoint - President Trump has proposed a cap on credit card interest rates at 10% effective January 20, 2026, to address consumer affordability concerns, which would be the lowest rate seen since at least 1994 [1][3]. Industry Impact - Credit card companies may face negative stock reactions if the proposed cap reduces their net interest income, which was a record $130 billion in 2022 [2][4]. - The average credit card interest rate in the U.S. is currently 19.65%, with store credit cards averaging 30.14% [3]. - A cap on interest rates could lead to reduced access to credit, particularly for younger and less affluent individuals, as companies may limit credit supply to manage risk [6][7]. Company Performance - American Express reported $15.5 billion in net interest income for 2024, an 18% increase from 2023, driven by higher interest rates and revolving loan balances [10]. - Capital One's net interest income rose to $31.2 billion in 2024, a $2 billion increase from the previous year, attributed to higher average loan balances [11]. - Investors should monitor the potential impact on net interest income for major card issuers like American Express, JPMorgan Chase, and Capital One if the cap is implemented [9]. Regulatory and Market Reactions - Industry groups, including the Bank Policy Institute and the American Bankers Association, have opposed the cap, arguing it could push consumers toward less regulated and more costly alternatives [11]. - The proposed cap follows previous unsuccessful attempts by Senators Hawley and Sanders to implement similar measures [3].