Bank stocks had a rough start to the week after Donald Trump said he wants to limit credit card interest rates to 10 percent for a year, a proposal that rattled investors across the sector.
Capital One was one of the hardest hit, down about 6 percent by midday, while Synchrony Financial sank more than 8 percent. Both lenders lean heavily on credit card income, making them especially sensitive to any threat to margins. The sell-off was milder among larger, more diversified banks.
Citigroup slipped close to 4 percent, and JPMorgan Chase and Bank of America were each down around 2 percent. Visa and Mastercard, which only process payments and do not carry credit risk, still fell about 2 percent.
The pressure spread quickly. American Express dropped roughly 4 percent and Wells Fargo lost about 2 percent.
Trump said in a post on Truth Social that the rate cap would take effect on January 20, 2026, repeating a promise he made on the campaign trail, although he did not explain how it would be enforced. Speaking to reporters later, he suggested banks that fail to comply would be breaking the law. Any such change would still require congressional approval, even though similar bipartisan bills have been proposed before.
Skeptics say a strict ceiling on interest rates would almost certainly push banks to rein in lending, especially to borrowers with weaker credit. That could squeeze consumer spending, which makes up roughly two-thirds of the U.S. economy. Banking executives and analysts also warn that large parts of the credit card business would become uneconomical, forcing lenders to cut rewards and pull back from subprime customers.
Shares of buy-now-pay-later firms briefly climbed on the idea that shoppers might turn to them instead, but the rally did not last. Affirm finished the session down more than 6 percent, and PayPal closed about 1 percent lower.
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