President Donald Trump asked credit‑card companies to lower their interest rates to 10% for a year, a move that sent major U.S. banks tumbling.
What the proposal means
Currently, many credit‑card rates sit above 20%. A 10% cap would cut the profit banks earn from card fees and could force them to tighten lending.
Immediate market reaction
- Capital One fell 6.4%, its biggest drop in nine months.
- American Express slipped 4.3%.
- JPMorgan Chase dropped 1.4%.
- Other banks like Citigroup and Wells Fargo fell 3% and 1% respectively.
- Visa and Mastercard also slipped as they earn fees from card usage.
Analyst concerns
Analysts say a 10% cap could erase a year’s worth of earnings from credit cards and make banks less willing to lend. They doubt the proposal will pass because the banking lobby is strong in Congress.
Who could be hurt or helped
Lower‑income borrowers might find it harder to get credit if banks cut back lending. They could be pushed toward more expensive alternatives like payday loans.
Some think “buy‑now‑pay‑later” firms such as Klarna and Affirm could become more attractive, though their shares also fell after the news.
Broader impact
Airlines and retailers that earn money from card partnerships, such as Delta, United, Southwest, Macy’s and Kohl’s, also saw their stocks drop.
Disclaimer
Remember, this is just an overview, not a prediction. Do your own research and consider your personal situation before making any investment decisions.