Core Viewpoint - American Express is experiencing a decline in stock price following President Donald Trump's announcement of a proposed one-year freeze on credit card interest rates, which includes a 10% cap starting January 20th [1] Company Impact - The proposed interest rate cap could significantly affect American Express's revenue model, as lower interest rates may lead to reduced income from interest on credit card balances [1] Industry Implications - The freeze on credit card interest rates may set a precedent for other financial institutions, potentially leading to broader changes in the credit card industry [1] - This regulatory move could impact consumer behavior, as lower interest rates might encourage more spending on credit cards, affecting overall credit market dynamics [1]

Group 1 - Financial services stocks experienced a decline following President Trump's announcement of a proposed cap on credit card interest rates at 10% for one year [1][2] - Citi Group saw a nearly 4% drop in premarket trading, while JPMorgan Chase fell by 3% and Bank of America decreased by 2.45% [1] - Other financial entities were also impacted, with Wells Fargo losing 2% and PayPal dipping 0.26% [1] Group 2 - The proposed cap is set to take effect on January 20, 2026, as stated by Trump in a post on Truth Social [2] - Trump emphasized that the cap is part of his campaign pledge to protect the American public from being "ripped off" by credit card companies [2]

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].

Group 1 - President Trump proposed a one-year cap on credit card interest rates at 10%, claiming the American public is being "ripped off" [1] - The announcement has received criticism from various political figures, including Sen. Bernie Sanders, who labeled the cap as "unacceptable" [3] - The issue of high credit card interest rates has been a persistent concern, particularly as many Americans lack sufficient emergency savings, leading to financial strain [2] Group 2 - Sanders criticized Trump's proposal, stating it contradicts his earlier commitment to regulate Wall Street and impose a 10% cap on interest rates [3] - Significant profits of large banks have been highlighted, with JPMorgan CEO Jamie Dimon reportedly increasing his wealth by $770 million in 2025 [4] - Sen. Elizabeth Warren criticized Trump's promises regarding the credit card rate cap as empty and accused him of ignoring affordability [4] Group 3 - Hedge fund manager Bill Ackman warned that if credit card lenders cannot charge adequate rates, they may cancel millions of consumer cards, pushing consumers towards loan sharks with worse terms [5]

Group 1 - President Trump proposed a one-year cap on credit card interest rates at 10%, effective January 20, aiming to address high rates that currently range from 20% to 30% [1] - The proposal is part of the Trump administration's efforts to show voters that it is tackling cost concerns ahead of the November midterm elections [2] - Senator Bernie Sanders criticized Trump's past deregulation of banks, suggesting that capping interest rates could lead to negative consequences for consumers [3] Group 2 - Banking trade groups warned that capping interest rates at 10% could force consumers to seek alternative financing options, potentially leading to reliance on unregulated lenders [4] - The Bank Policy Institute indicated that while the cap aims to alleviate debt burdens, it could restrict access to credit cards and reduce cardholder benefits [5] - Senator Josh Hawley expressed support for Trump's proposal, indicating a political backing for the initiative [5]