White House move shocks Wall Street’s favorite banks | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Wall Street woke up Monday, Jan. 12, to discover that one of its favorite profit engines is suddenly in the political crosshairs.

President Donald Trump called for a one‑year cap on credit card interest rates at 10%, saying the move would take effect January 20 and arguing that Americans are being “ripped off” by rates of 20% to 30%.

The president said in a Truth Social post 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%,” reaffirming a key promise from his 2024 campaign.

The statement landed like a shock across bank and payments stocks. Shares of some of Wall Street’s favorite lenders dropped as investors quickly repriced the risk to lucrative fee and interest income.

Bank and card stocks react to Trump’s push for lower credit-card interest rates

If you own financial stocks in a retirement account or ETF, you felt this move through the broad market. The president did not release a bill or regulatory proposal, but the possibility of a hard cap on one of banks’ highest‑yielding products was enough to hit prices fast, according to Reuters.

Citigroup fell nearly 4% in premarket trading, JPMorgan Chase dropped about 3%, and Bank of America slid more than 2.3%, according to CNBC. Wells Fargo shares also traded lower, extending the pressure across traditional lenders, according to U.S. News & World Report.

TheWhite House’s credit-card move shocked Wall Street’s favorite banks.

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American Express, Visa, and Mastercard traded down as well, with American Express off roughly 4% and Visa and Mastercard each down close to 2%, as reported by BBC News.

Capital One and Synchrony Financial slumped by as much as 9% in premarket trading, reflecting fears that pure‑play card lenders could see their core business structurally squeezed, according to Yahoo Finance.

Why the White House’s 10% rate-cap announcement rattled Wall Street

If you use credit cards to bridge bills or carry a balance, you know how expensive that debt has gotten. Rates in the mid‑20s are common even for mainstream borrowers, and that spread over funding costs is a huge source of profit for major banks, according to Federal Reserve data summarized by Yahoo Finance.

Annual credit card interest charges rose 52% from 2022 to 2024, while the number of cardholders increased only 9%, which translated to an extra $45 billion in interest charges not explained by account growth, according to a January analysis by the Trump administration’s Consumer Financial Protection Bureau.

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The same CFPB report said American families paid more than $30 billion in credit card fees in 2024, including roughly $17 billion in late fees, the highest volume of card fees the agency has ever recorded.

Wall Street is nervous because a blunt 10% cap directly targets those rich profit pools. J.P. Morgan analyst Vivek Juneja warned that a strict rate limit “would not tackle the underlying issue and might drive consumers towards more costly debt,” arguing that some borrowers could be pushed toward pawn shops and non‑bank lenders if banks pull back, according to U.S. News & World Report.

Analysts at Raymond James said the president “does not have the power to impose an interest rate cap on his own” and that any real limit “would require Congress to pass legislation,” while still warning that political risk had “clearly increased” after Trump’s comments, according to Yahoo Finance.

What the credit-card rate proposal could mean for your wallet

On paper, a 10% cap sounds like an instant win if you are carrying a balance at 24% or 29%. Trump said in his Truth Social post that “we will no longer allow the American Public to be ‘ripped off’” by current credit card rates, as detailed by CNBC and Yahoo Finance.

In practice, the details matter more than the sound bite. A one‑year 10% cap could cut large banks’ pre‑tax earnings by roughly 5% to 18% and potentially “wipe out earnings” for some lenders that focus heavily on card interest and fees, according to Wells Fargo analyst Mike Mayo, who was cited by Yahoo Finance.

Faced with that kind of margin compression, banks could respond by tightening credit standards, lowering limits, closing higher‑risk accounts, or layering on new fees where any cap does not reach, according to analysts quoted by Reuters.

Fintech and installment lenders could be surprise winners if traditional banks pull back. The proposed cap could also “have major positive ramifications” for buy now, pay later and personal loan providers such as Affirm, SoFi, Block, and PayPal, according to Mizuho analyst Dan Dolev, who was cited by Yahoo Finance.

For you as a cardholder, that could mean more offers from fintechs and alternative lenders, but also more complexity in comparing total borrowing costs once you factor in fees, penalties, and how fast balances amortize, according to analysts quoted by MEXC and Reuters.

3 practical implications if the credit-card interest-rate cap becomes policy:

Tougher approvals and lower limits on traditional credit cards, especially if you have a thin file or fair credit, according to analysts cited by Reuters and Yahoo Finance.
More aggressive marketing of “buy now, pay later,” personal loans, and other unsecured products, as banks and fintechs look for ways around any headline cap, according to MEXC.
Potential reshuffling of rewards programs as issuers try to protect profit pools, which could mean less generous cash back or travel perks over time, according to the CFPB’s broader findings on fees and pricing pressure.

What long-term investors should watch as credit-card rate story unfolds

If you invest in big banks, you are not just betting on this quarter’s earnings report; you are betting on the rules of the game staying reasonably stable. Jan. 12’s selloff is a reminder that regulatory and political risk can knock even the best‑run lenders off course, at least temporarily.

In my view, a one‑year 10% cap sounds great if you are staring at a 25% APR on your statement, but the way banks usually respond to this kind of squeeze is not by quietly taking the loss; it is by tightening credit, cutting limits, and finding new fees that are harder for you to see coming.

My read of the analyst commentary is that you should treat this as a wake‑up call to pay down expensive balances and diversify where you borrow, rather than betting that Washington will suddenly make your credit-card debt cheap.