Shares of US banks and financial services companies suffered a sharp decline during trading on Monday, following President Donald Trump's announcement of his intention to impose a temporary one-year cap on credit card interest rates at no more than 10%. This decision, aimed at protecting citizens from what Trump described as exploitation, immediately raised concerns among investors about the profitability of the banking sector and its ability to assess credit risk in early 2026.
Heavy losses for major banks and payment companies
Citigroup shares led the decliners, falling nearly 4% in premarket trading, while JPMorgan Chase shares lost about 3% of their value. Other payment processors and banking services companies were not immune to the downturn; Bank of America shares dropped 2.45%, and Visa, Mastercard, and Wells Fargo shares fell between 1.5% and 2%. PayPal shares also saw a slight decline of 0.26%, reflecting the widespread selling pressure across the entire financial sector.
Implementation date and procedural ambiguity
According to a post by President Trump on the Truth Social platform, this price cap is scheduled to take effect on January 20, 2026, coinciding with the one-year anniversary of his taking office. While the target price cap of 10% was clearly stated, Trump did not provide further details on the legal mechanism by which this decision would be implemented, whether through direct executive action or through legislation passed in conjunction with Congress.
Fulfilling campaign promises
This decision is a direct translation of promises Trump made during his 2024 presidential campaign, where he repeatedly asserted that he would not allow credit card companies to exploit the American public with interest rates that sometimes reached 30%. Analysts believe that this move, despite its popularity with borrowers, could lead to stricter lending standards and reduced credit availability for low-income groups. Markets will be closely watching the actual impact of this as the major banks' earnings season begins in the coming days.
