President Donald Trump asked credit‑card issuers to limit interest rates to 10% for a year, a move that sent major US banks’ shares sharply lower.
Trump told reporters that, starting Jan. 20, credit‑card companies must keep rates at or below 10% or face legal trouble. Current rates are often above 20%.
Shares of the biggest card issuers fell:
Even payment networks that don’t issue cards, like Visa and Mastercard, slipped because they earn fees when consumers use cards.
Analysts say a 10% ceiling could erase a year’s worth of earnings from card‑related fees and interest. One analyst called it a "ruinous" change that would make banks stop lending on cards.
If banks pull back on credit‑card loans, lower‑income borrowers could lose access to affordable credit. They might turn to more expensive alternatives such as payday lenders or high‑interest personal loans.
While many banks and retailers felt the pain, some fintech firms could benefit if shoppers shift to buy‑now‑pay‑later services. Shares of Klarna and Affirm still fell, but the sector may see more interest.
Most analysts doubt the proposal will become law because of strong lobbying from the banking sector. One noted, "Given how severe it is, it is hard to imagine it moving forward."
Industry groups said they share the goal of cheaper credit but warned a hard cap would cut credit availability and hurt millions of families and small businesses.
The 10% rate cap is a political flashpoint that could reshape credit‑card economics, but it faces steep odds in Congress. Investors should watch how the debate evolves and consider the broader impact on both banks and borrowers.
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.
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