NEW DELHI, India — Shares of major U.S. credit card issuers and banks fell sharply after President Donald Trump called for a one-year cap of 10 percent on credit card interest rates, triggering concerns over profitability and lending.
American Express shares dropped about 4.3 percent to $359, while Capital One plunged 6.4 percent, marking its steepest decline in nine months. American Express stock has fallen more than 5 percent over the past five days. Citigroup slid 3 percent, Wells Fargo eased 1 percent, and Synchrony Financial tumbled 8.4 percent.
The sell-off followed Trump’s warning that companies failing to lower credit card interest rates to 10 percent by January 20 would be considered “in violation of the law” and face “very severe things.”
“I want a cap on credit card interest rates because some of them are 28 — almost 30 percent. People don’t know they’re paying 30 percent (credit card interest rates),” Trump said. “The people out there are working, and they have no idea that they’re paying 30 percent. We are putting a one-year cap at 10 percent and they know it. They (credit card companies) have really abused the public. I am not going to let it happen.”
Analysts warned that such a cap could erase billions of dollars in industry profits and significantly restrict lending. Payment networks Visa and Mastercard, which do not issue credit cards but earn fees from card usage, were also affected amid concerns that lower lending volumes could reduce transaction activity.
Industry groups, including the Bank Policy Institute and the Consumer Bankers Association, have said they support efforts to make credit more affordable but cautioned that a 10 percent interest-rate cap could reduce access to credit and hurt consumers and small businesses that depend on credit cards.
Market analysts noted that implementing the proposal would require new legislation from Congress and said it is unlikely to pass given the banking industry’s strong lobbying presence on Capitol Hill.
Trump’s remarks come as the U.S. approaches midterm elections later this year, following comments to Republican aides in which he raised the prospect of impeachment if his party were to lose the November polls. (Source: IANS)
