Trump Proposes 10% Credit Card Interest Rate Cap, Bank Stocks Face Potential Impact
Trump proposed a 10% credit card interest rate cap effective January 2026, significantly below current market averages of 19.65%. Major card issuers like American Express and Capital One, with billions in net interest income, face potential revenue impacts. Industry groups oppose the measure, citing concerns about reduced credit access and consumer migration to less regulated alternatives.
*this image is generated using AI for illustrative purposes only.
Trump announced a proposed 10% cap on credit card interest rates through a Truth Social post, stating the measure would be effective January 20, 2026. The proposed rate represents a dramatic reduction from current market levels, with the average credit card interest rate in the U.S. currently at 19.65% and store credit cards averaging 30.14% according to Bankrate data.
Market Context and Historical Perspective
The proposed 10% cap would establish the lowest credit card interest rate seen since at least 1994. This initiative mirrors a similar proposal from Senators Josh Hawley and Bernie Sanders in February 2025, which failed to gain legislative traction. The credit card industry generated record revenues of ₹10.83 lakh crores ($130 billion) in interest and fees during 2022, with the average cardholder maintaining a balance exceeding ₹4.17 lakh ($5,000).
| Market Indicator | Current Level |
|---|---|
| Average Credit Card Rate | 19.65% |
| Store Credit Card Rate | 30.14% |
| Total U.S. Credit Card Balances | ₹1.02 crore crores ($1.23 trillion) |
| Quarterly Balance Increase | ₹2.00 lakh crores ($24 billion) |
Impact on Major Card Issuers
The proposed cap poses significant challenges for major credit card companies, particularly affecting their net interest income streams. American Express reported ₹1.29 lakh crores ($15.5 billion) in net interest income for 2024, representing an 18% increase from 2023. This growth was driven by higher interest rates, increased revolving loan balances, and expansion among younger cardholders who value loyalty rewards.
Capital One Financial demonstrated even larger exposure with ₹2.60 lakh crores ($31.2 billion) in net interest income for 2024, marking a ₹16.67 thousand crores ($2 billion) increase from the previous year. The company attributed this growth primarily to higher average loan balances and improved margins in its credit card portfolio.
| Company | 2024 Net Interest Income | Year-over-Year Change | Stock Performance 2025 |
|---|---|---|---|
| American Express | ₹1.29 lakh crores | +18% | +25.7% |
| Capital One | ₹2.60 lakh crores | +₹16.67k crores | +37% |
Industry Opposition and Economic Concerns
Industry trade groups have already voiced opposition to the proposed cap. The Bank Policy Institute stated that such measures would "drive consumers toward less regulated, more costly alternatives." The American Bankers Association expressed similar concerns when the cap was initially proposed by Senators Hawley and Sanders.
Economic research suggests interest rate caps often produce unintended consequences. A 2023 study examining Illinois's 36% cap on consumer loans found that subprime borrower loan volume decreased by 38% within six months of implementation. Financial experts warn that when companies cannot properly price risk, they typically reduce credit access for smaller and riskier borrowers.
Consumer Financial Landscape
Current consumer debt conditions highlight the complexity of the affordability challenge. Subprime credit card borrower delinquency rates remain elevated at 16.3%, despite overall improvements in debt repayment behavior according to Federal Reserve data. Total credit card balances reached ₹1.02 crore crores ($1.23 trillion) in the third quarter, representing a ₹2.00 lakh crores ($24 billion) quarterly increase.
Upcoming Financial Disclosures
Investors will closely monitor upcoming earnings reports for additional insight into potential impacts. JPMorgan Chase is scheduled to report earnings on January 13, Capital One will announce 2025 results on January 22, and American Express will provide performance updates on January 30. The implementation timeline and specific mechanisms for the proposed cap remain unclear, leaving market participants to assess the proposal's feasibility and potential market implications.
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