Big bank shares are plummeting following Trump's recent remarks

Trump Suggests Limiting Credit Card Interest Rates

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Over the weekend, President Donald Trump proposed setting a maximum limit on credit card interest rates.

Main Points

• Banking stocks dropped on Monday after Trump announced his intention to cap credit card interest rates at 10% for at least a year.
• Details about how this cap would be enforced and the reason for the one-year timeframe remain uncertain.

Shares of several major banks and financial companies declined on Monday morning following Trump’s suggestion to restrict credit card interest rates.

On Friday night, Trump posted on social media, criticizing the current 20% to 30% interest rates as unfair to Americans. He stated that, starting January 20, he would push for a 10% cap lasting one year. However, the specifics of how such a limit would be put into effect are still unknown.

Capital One Financial (COF) saw its stock fall by more than 5% early Monday. Citigroup (C) and American Express (AXP) each experienced a 3% drop. JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC) all declined between 1% and 2%. Synchrony Financial (SYF) shares dropped nearly 7%, while Visa (V) and Mastercard (MA) both lost around 3%.

What This Means for Consumers

Introducing a cap on credit card interest rates could reduce borrowing costs for some consumers, but may also negatively affect companies that issue credit cards.

This week, leaders from several major banks will have the opportunity to address this proposal as the earnings season begins, with JPMorgan set to report on Tuesday.

Financial stocks may also be reacting to recent tensions between the Trump administration and the Federal Reserve, which determines the federal funds rate that influences consumer loan rates. On Sunday night, Fed Chair Jerome Powell revealed that the central bank received subpoenas on Friday as part of a grand jury investigation into his congressional testimony last year regarding the Fed’s renovation, which has faced criticism from Trump. Powell described the investigation as politically driven, following the Fed’s decision not to lower rates as quickly as the president had hoped.