Shares of JPMorgan Chase and other major banks slid sharply Monday after President Donald Trump called for a one‑year, 10% cap on credit‑card interest rates, a move that threatens one of the banking industry’s most profitable revenue streams and sent shockwaves through financial markets. The proposal, announced via Truth Social on Friday, would take effect January 20, 2026, and has already triggered a sell‑off in credit‑card‑focused lenders while raising urgent questions for investors about the future of bank stocks.
How the Credit‑Card Rate Cap Shook Wall Street
Financial stocks opened the week deep in the red as traders digested the unexpected White House demand. JPMorgan Chase, the nation’s largest bank, fell 2.5% in early trading, while Bank of America dropped 1.6% and Citigroup tumbled 3.7%. The pain was even more acute for lenders that specialize in credit‑card offerings: Capital One plunged 6%, Synchrony Financial sank more than 8%, and American Express slid 3.8%. Even payment processors Visa and Mastercard, which don’t extend credit themselves, each slipped about 1.8%.
Trump’s Friday post stated, “Effective January 20, 2026, I, as President of the United States, am calling for a one year cap on Credit Card Interest Rates of 10%.” He added, “Please be informed that we will no longer let the American Public be 'ripped off' by Credit Card Companies.” The announcement echoes a pledge he made during the 2024 campaign, but it lacked any details on how the cap would be enforced or whether it would require Congressional action.
Timeline: From Friday Announcement to Monday’s Market Plunge
The sequence of events moved quickly. Trump’s Truth Social post landed late Friday, January 10, catching many investors off guard. Over the weekend, bank industry groups issued statements warning that a 10% rate cap would make large swaths of the credit‑card business unprofitable and force lenders to cut off riskier borrowers. By Monday morning, January 12, the market’s verdict was clear: financial stocks led the downward move, with the KBW Bank Index falling more than 2% at its lows.
Meanwhile, JPMorgan Chase reported its fourth‑quarter earnings on Tuesday, January 13—and the credit‑card cap dominated the conversation. CFO Jeremy Barnum told reporters that the industry could fight the proposal, saying “everything’s on the table” if the administration pushes “weakly supported directives to radically change our business.” Barnum argued that a rate cap would have the opposite of its intended effect, reducing the supply of credit rather than making it cheaper.
Why the Proposed Cap Could Backfire for Consumers and Investors
Wall Street analysts were nearly unanimous in warning that a hard 10% limit would hurt banks, consumers, and the broader economy. “This rate cap would not address the root of the problem and could push consumers toward more expensive debt,” J.P. Morgan analyst Vivek Juneja wrote in a research note. “It could push more borrowing away from banks into other unsecured loans such as pawn shops and other non‑bank consumer lenders.”
UBS Global analysts noted that such a measure would likely require an Act of Congress, and even then would face fierce legal challenges. The average credit‑card interest rate currently stands at about 20%—19.7% according to Bankrate.com and 20.97% per the Federal Reserve’s latest consumer‑credit report. A cap at half that level would erase billions in net‑interest income for banks, forcing them to slash credit lines, reduce rewards programs, and raise other fees to compensate.
“Our belief is that actions like this will have the exact opposite consequence to what the administration wants for consumers,” JPMorgan’s Barnum said. “Instead of lowering the price of credit, we’ll simply reduce the supply of credit, and that will be bad for everyone: consumers, the wider economy, and yes, at the margin, for us.”
Where Things Stand Now: Legal Hurdles and Bank Earnings
As of Tuesday, January 13, the path forward for the rate cap remains murky. No existing U.S. law authorizes the President to unilaterally cap credit‑card rates, and a bipartisan bill introduced last year by Senators Josh Hawley and Bernie Sanders—which would limit APRs to 10% for five years—has stalled in Congress. Trump told reporters Sunday that banks that ignore the directive would be “in violation of the law,” but he did not specify what enforcement mechanism he would use.
Bank executives are now under intense pressure to address the issue during the ongoing fourth‑quarter earnings season. JPMorgan’s results, released Tuesday, showed robust overall profits, but the credit‑card uncertainty overshadowed the numbers. Bank of America, Citigroup, and Wells Fargo are scheduled to report later this week, and analysts will be listening closely for any guidance on how a rate cap could affect future earnings.
What Happens Next: Predictions for Investors
Most Wall Street observers believe the likelihood of a 10% credit‑card interest‑rate cap becoming reality is low, given the legislative and legal obstacles. However, the mere proposal has already introduced significant volatility into financial stocks, and investors should prepare for continued pressure on bank shares until the uncertainty is resolved.
If the cap were somehow implemented, banks would likely respond by tightening lending standards, reducing credit limits, and scaling back rewards programs—moves that would disproportionately affect subprime borrowers and could slow consumer spending. For investors, this underscores the importance of diversification within the financial sector: lenders with diversified revenue streams (such as those with strong investment‑banking or wealth‑management arms) may prove more resilient than those heavily reliant on credit‑card interest income.
The Bottom Line: Key Points to Remember
Trump’s call for a 10% credit‑card interest‑rate cap sent bank stocks tumbling, with JPMorgan Chase, Bank of America, and Citigroup all falling between 1.5% and 4%. The proposal lacks a clear enforcement mechanism and would likely require Congressional approval, making its implementation uncertain. Analysts warn that a cap would reduce credit availability, push consumers toward more expensive alternative lenders, and dent bank profits. Investors should monitor upcoming bank earnings calls for further guidance and consider diversifying their financial‑sector exposure to mitigate regulatory risk.
