Banking and financial services stocks experienced a sharp decline on Monday following comments from U.S. President Donald Trump, who proposed a one-year cap on credit card interest rates at 10%. This announcement led to significant losses in premarket trading for major financial institutions.
Citi Group witnessed a nearly 4% drop, setting a negative tone for the sector. JPMorgan Chase was down 2.88%, having mitigated some of its earlier losses. Other notable declines included Bank of America, which fell by 2.36%, and credit processing giants Visa and Mastercard, which dropped 1.94% and 2.21%, respectively.
The fallout extended beyond traditional banking stocks to financial services as well, with American Express experiencing a substantial loss of 4.87%. Wells Fargo was down 2.01%, while Morgan Stanley felt a minor hit, decreasing by 0.98%.
Trump’s call for a cap, set to take effect on January 20, 2026, was shared on Truth Social, where he reiterated a commitment made during his 2024 presidential campaign. “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 wrote. He further emphasized his intent to protect consumers, stating, “Please be informed that we will no longer let the American Public be ‘ripped off’ by Credit Card Companies.”
For the cap to be enacted, congressional approval would be necessary. There has long been a discussion surrounding the need to regulate fees associated with credit cards, and previous bipartisan legislative efforts have sought to introduce similar caps, indicating potential support from both sides of the aisle.
As the financial sector grapples with the implications of Trump’s proposal, investors remain concerned about the effects on profitability for credit card companies and the broader banking industry. The proposed cap on interest rates raises significant questions about future lending practices and financial sustainability.
