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Capital One led a decline in shares of US credit card issuers on Monday after Donald Trump called for rates to be capped at 10 per cent, as the US president tries to address Americans’ concerns over the cost of living.
In pre-market trading, Capital One shares were down 10 per cent, American Express dropped 5 per cent, Citigroup fell 4 per cent and JPMorgan Chase was 2.8 per cent lower.
London-listed Barclays, which has ambitions to grow its US credit card business, dropped 3 per cent.
In a Truth Social post on Friday evening, Trump called for a 10 per cent cap to come into force on January 20, the anniversary of his inauguration, and that it should remain in place for a year.
The credit card business has in recent years become a lucrative one for banks. US credit card debt stands at about $1.1tn, with an average interest rate of roughly 20 per cent, according to data from the St Louis Federal Reserve.
Although it was unclear whether the Trump administration would take any regulatory steps to enforce a cap, the US president stepped up his criticism of credit card issuers late on Sunday.
Speaking to reporters on Air Force One, Trump said that if companies failed to comply by January 20, “then they’re in violation of the law. Some of them are charging 28 per cent, almost 30 per cent.”
A joint statement from several bank lobby groups hit out at Trump’s proposal, saying that “evidence shows that a 10 per cent interest rate cap would reduce credit availability” and warned that “this cap would only drive consumers towards less regulated, more costly alternatives”.
Trump had threatened to cap credit card interest rates during his 2024 presidential campaign.