Trump’s 10% credit card cap idea jolts banks as earnings loom

President Donald Trump’s call for a one-year, 10% cap on credit card interest rates is colliding with the start of bank earnings season, putting fresh pressure on a sector that had entered 2026 with improving sentiment.

Credit card issuers and card-heavy banks slid Monday after Trump said on Truth Social that “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%.”

Newsrooms including Barron's and CNBC reported that Synchrony Financial, Capital One, and American Express were hit hardest, with losses ranging from mid-single digits to double digits in early trading. Citigroup, JPMorgan Chase, and Bank of America also traded lower as investors recalibrated the risk to card-driven revenue.

The proposal lands at an awkward time. Large banks are set to report fourth-quarter results this week after a strong 2025 on the back of deal activity and markets-related revenue, with another run in the cards for the sector this year based on solid earnings and credit quality. That constructive backdrop is now competing with renewed political focus on consumer borrowing costs and the potential for price controls.

While Trump's order has a clear direct line to his broader affordability agenda, which includes last week's pledge against single-family home ownership by institutions, policy specialists were quick to note that he cannot unilaterally impose a rate ceiling. Any broad cap would require Congress to act, according to Raymond James Washington policy analyst Ed Mills, who said “the legislative risk remains relatively low, but clearly higher now that the president has called for this action.”

Still, analysts and industry insiders are treating the idea as a real threat to card economics, especially for lenders serving riskier borrowers. Average national credit card rates are near 20%, with subprime borrowers and store-branded cards paying even more. A sudden move to 10% would wipe out profitability across much of that book, pushing issuers to pull back from subprime segments, curtail rewards and tighten underwriting.

Truist analyst Brian Foran warned that “the renewed focus on a 10% interest rate cap for credit cards is not great, to put it mildly. We estimate it would swing the business to unprofitable if enacted, with subprime credit cards hardest hit.” He flagged Synchrony and Bread Financial Holdings as particularly exposed, followed by Capital One.

Behind the scenes, bank executives are treating the threat seriously, if not literally. “We cannot offer products at a loss; there’s no scenario where we would take our entire portfolio to 10%,” a person with knowledge of operations at a large bank told CNBC, requesting anonymity. “It’s not a stretch to suggest this will very quickly tank the economy.”

Market strategists also doubt the proposal can be implemented as described. Legislative timing alone makes the January start date implausible, and alternative routes through bank regulators or the Consumer Financial Protection Bureau are murky.

“I’m not aware of an authority that they can use to do this unilaterally in any kind of a sweeping way,” said Tobin Marcus, head of US policy at Wolfe Research, who suggested the timing may instead be meant to pressure issuers into voluntary concessions.