Shares in US credit card issuers slide after Trump calls for 10% rate cap – Financial Times
Capital One led a decline in shares of US credit card issuers on Monday after Donald Trump called for rates to be capped at 10 per cent, as the US president tries to address Americans’ concerns over the cost of living.
Capital One shares closed 6.4 per cent lower on Wall Street, American Express dropped 4.3 per cent, Citigroup fell 3 per cent and JPMorgan Chase was 1.4 per cent lower.
London-listed Barclays, which has ambitions to grow its US consumer bank, dropped 2.4 per cent.
In a Truth Social post on Friday evening, Trump called for a 10 per cent cap to come into force on January 20, the anniversary of his inauguration, and that it should remain in place for a year.
The credit card business has in recent years become a lucrative one for banks. US credit card debt stands at about $1.1tn, with an average interest rate of roughly 20 per cent, according to data from the St Louis Federal Reserve.
It was unclear how the Trump administration could seek to enforce a cap. Neither the White House nor US regulators have the power to set credit card interest rates and such a step would probably require an act of Congress.
But late on Sunday Trump stepped up his criticism of credit card issuers.
Speaking to reporters on Air Force One, Trump said that if companies failed to comply by January 20, “then they’re in violation of the law. Some of them are charging 28 per cent, almost 30 per cent.”
Banks have warned a cap would cut off credit to lower-income consumers, driving them into the hands of less scrupulous lenders. Lenders also argue higher interest rates are needed when providing unsecured credit to consumers who are more likely to default.
A joint statement from several bank lobby groups attacked the proposal, saying “evidence shows that a 10 per cent interest rate cap would reduce credit availability” and warned “this cap would only drive consumers towards less regulated, more costly alternatives”.
Jaret Seiberg, a financial services analyst at TD Cowen, noted the proposed cap could limit credit card lending and expose banks to risk, adding “both could hurt the economy”.
US Treasury secretary Scott Bessent might seek to push back on a 10 per cent cap, he added.
