We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Trump's 10% Credit Card Rate Cap: Who Wins and Who Takes the Hit?
Read MoreHide Full Article
Key Takeaways
The President called for a credit-card rate cap starting Jan. 20, 2026, to ease affordability pressures.
V earns fees from transactions, so a rate cap hits it indirectly via credit availability & spending trends.
COF faces direct pressure as interest income drives profits & a major acquisition expanded its lending.
President Donald Trump has reignited the debate over credit-card costs, calling on companies to cap interest rates at 10% for one year. In a Truth Social post on Friday, Trump said the cap would take effect from Jan. 20, 2026, coinciding with the first anniversary of his second inauguration. The proposal is framed as a response to rising affordability pressures on American households, as credit card balances continue to swell.
While details on implementation are yet to be clear, the market impact could be swift. Credit-card companies and banks may already be bracing for a stock reaction if lower rates compress profitability. The effect would not be uniform across the industry. Payment networks such as Visa Inc. (V - Free Report) and Mastercard Incorporated (MA - Free Report) face a very different risk profile compared with card issuers like American Express Company (AXP - Free Report) and Capital One Financial Corporation (COF - Free Report) .
President Trump floated the idea of a credit-card rate cap during his second presidential campaign, positioning it as a consumer-first measure. According to the New York Federal Reserve, U.S. credit-card debt reached $1.23 trillion in the third quarter of 2025, up 5.75% from a year ago. He took aim at credit-card rates hovering between 20% and 30% under the previous administration.
Supporters argue that a cap could offer meaningful relief amid persistent concerns about household financial stress. By limiting rates to 10%, Americans could save billions of dollars in interest payments over the year, freeing up cash for essentials or debt reduction.
Winners, Losers and Unintended Consequences
The proposal is not without controversy. Several groups warn that lower rates may come at a cost. Credit-card companies could respond by trimming rewards programs or tightening lending standards. Some argue that restricted pricing could reduce credit availability for higher-risk borrowers, including small business owners. This can drive people toward less regulated alternatives and affect consumption in the short run.
There is also a question of consumer behavior. A Vanderbilt Law School analysis estimates potential savings of up to $100 billion annually. Lower rates could trigger faster repayment, shrinking outstanding balances. On the other hand, cheaper credit might lead to additional card usage, increasing spending.
Why Business Models Matter
Visa and Mastercard operate payment networks, earning fees tied to transaction volume rather than interest income. They do not issue cards or assume credit risk. For them, the impact of a rate cap would likely be indirect. Reduced credit availability could weigh on transaction growth in the short term, but improved affordability could eventually lift spending.
Issuers face a more direct hit. American Express, which both issues cards and earns transaction-related fees, relies notably on interest income. In the first nine months of 2025, its interest income rose 7% year over year to $19 billion, while non-interest revenues climbed 8% to $40.4 billion. However, AmEx’s premium customer base provides it with a buffer during volatile economic environments.
But Capital One is significantly exposed. After acquiring Discover Financial Services, its lending footprint expanded further. In the third quarter alone, Capital One posted a 24% surge in net interest income to $12.4 billion, with net interest margin widening 74 basis points to 8.36%. At the quarter-end, its Credit Card period-end loans increased to $271 billion. Over the first three quarters of 2025, its total credit card net charge-off rate was 5.17%.
The Bigger Picture
Banks are widely expected to challenge the proposal in court, arguing it undermines credit access and distorts market pricing. Legal action could delay or block execution. Even if enacted, assuming the cap is limited to one year, it may cause limited damage, but it highlights how regulatory risk can reshape sentiment quickly.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Trump's 10% Credit Card Rate Cap: Who Wins and Who Takes the Hit?
Key Takeaways
President Donald Trump has reignited the debate over credit-card costs, calling on companies to cap interest rates at 10% for one year. In a Truth Social post on Friday, Trump said the cap would take effect from Jan. 20, 2026, coinciding with the first anniversary of his second inauguration. The proposal is framed as a response to rising affordability pressures on American households, as credit card balances continue to swell.
While details on implementation are yet to be clear, the market impact could be swift. Credit-card companies and banks may already be bracing for a stock reaction if lower rates compress profitability. The effect would not be uniform across the industry. Payment networks such as Visa Inc. (V - Free Report) and Mastercard Incorporated (MA - Free Report) face a very different risk profile compared with card issuers like American Express Company (AXP - Free Report) and Capital One Financial Corporation (COF - Free Report) .
All four companies currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Pitch Rooted in Rising Debt
President Trump floated the idea of a credit-card rate cap during his second presidential campaign, positioning it as a consumer-first measure. According to the New York Federal Reserve, U.S. credit-card debt reached $1.23 trillion in the third quarter of 2025, up 5.75% from a year ago. He took aim at credit-card rates hovering between 20% and 30% under the previous administration.
Supporters argue that a cap could offer meaningful relief amid persistent concerns about household financial stress. By limiting rates to 10%, Americans could save billions of dollars in interest payments over the year, freeing up cash for essentials or debt reduction.
Winners, Losers and Unintended Consequences
The proposal is not without controversy. Several groups warn that lower rates may come at a cost. Credit-card companies could respond by trimming rewards programs or tightening lending standards. Some argue that restricted pricing could reduce credit availability for higher-risk borrowers, including small business owners. This can drive people toward less regulated alternatives and affect consumption in the short run.
There is also a question of consumer behavior. A Vanderbilt Law School analysis estimates potential savings of up to $100 billion annually. Lower rates could trigger faster repayment, shrinking outstanding balances. On the other hand, cheaper credit might lead to additional card usage, increasing spending.
Why Business Models Matter
Visa and Mastercard operate payment networks, earning fees tied to transaction volume rather than interest income. They do not issue cards or assume credit risk. For them, the impact of a rate cap would likely be indirect. Reduced credit availability could weigh on transaction growth in the short term, but improved affordability could eventually lift spending.
Issuers face a more direct hit. American Express, which both issues cards and earns transaction-related fees, relies notably on interest income. In the first nine months of 2025, its interest income rose 7% year over year to $19 billion, while non-interest revenues climbed 8% to $40.4 billion. However, AmEx’s premium customer base provides it with a buffer during volatile economic environments.
But Capital One is significantly exposed. After acquiring Discover Financial Services, its lending footprint expanded further. In the third quarter alone, Capital One posted a 24% surge in net interest income to $12.4 billion, with net interest margin widening 74 basis points to 8.36%. At the quarter-end, its Credit Card period-end loans increased to $271 billion. Over the first three quarters of 2025, its total credit card net charge-off rate was 5.17%.
The Bigger Picture
Banks are widely expected to challenge the proposal in court, arguing it undermines credit access and distorts market pricing. Legal action could delay or block execution. Even if enacted, assuming the cap is limited to one year, it may cause limited damage, but it highlights how regulatory risk can reshape sentiment quickly.