Trump's new policy impacts financial stocks: credit card interest rate cap at 10%, bank stocks plunge before market open

2026-01-12 09:07:57

Trump’s call to set the credit card interest rate cap at 10% has triggered market turbulence. U.S. bank stocks generally declined before the market opened, with Citibank falling the most by 3.6%, JPMorgan down 2.4%, and Bank of America down 1.5%. This policy proposal reflects the Trump administration’s aggressive stance on financial reform and also exposes the market’s sensitivity to interest rate regulation policies.

Direct Consequences of Policy Impact

Why did bank stocks fall in response?

The impact of the credit card interest rate cap policy on the banking industry is direct. Credit card operations are a significant source of profit for U.S. banks, with high interest rate spreads (net interest margin) being their core competitive advantage in this area. According to market data, the average interest rate on U.S. credit cards is currently around 20%. Imposing a mandatory cap of 10% would substantially compress banks’ credit card interest income, directly threatening their profitability.

Bank	Pre-market decline	Impact analysis
Citibank	3.6%	High proportion of credit card business, most affected
JPMorgan	2.4%	Diversified operations, relatively resilient
Bank of America	1.5%	Also affected but market reaction is relatively mild

Feasibility issues of the policy

It is important to note that whether Trump’s call can translate into actual policy remains uncertain. Such financial regulatory policies typically require legislative support from Congress and involve complex economic trade-offs. However, market reactions indicate that investors are already viewing this proposal as a substantive policy risk.

Broader Policy Context

Trump administration’s financial reform approach

This interest rate cap proposal is not an isolated event. According to the latest news, the Trump administration is pushing forward with multiple financial policy reforms, including launching a mortgage-backed securities (MBS) purchase program aimed at countering the Federal Reserve’s balance sheet reduction. Meanwhile, Trump’s ongoing attacks on the Fed are also shaking market confidence in the stability of the financial system.

These series of policies and statements reflect a common logic of the Trump administration: using policy intervention to lower financing costs, but such interventions often weaken the profit margins of financial institutions.

Rising risk aversion in the market

Analysts point out that Trump’s attacks on the Federal Reserve have already shaken investor confidence. The market is increasing allocations to safe-haven assets, with traditional safe assets like gold and the Swiss franc performing well. The decline in bank stocks also somewhat reflects the spread of this risk-averse sentiment.

Future Focus

The subsequent development of this policy proposal warrants attention. If legislation is actually pushed forward, it will face strong opposition from the banking industry and complex negotiations in Congress. In the short term, the market may continue to be sensitive to similar financial reform policies. Additionally, this could influence investors’ valuation expectations for financial stocks.

Summary

Although Trump’s interest rate cap proposal appears simple, it reflects the deeper reform ideas of the Trump administration regarding the financial system. The immediate decline in bank stocks indicates that the market is taking this policy risk seriously. This not only affects the short-term trend of financial stocks but also reveals market concerns over policy uncertainty. Whether and how this policy will be advanced in the future will be a key variable influencing the financial sector.

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