Trump's 10% Credit Card Rate Cap: Who Wins and Who Takes the Hit?

President Donald Trump has reignited the debate over credit-card costs, calling on companies to cap interest rates at 10% for one year. In a Truth Social post on Friday, Trump said the cap would take effect from Jan. 20, 2026, coinciding with the first anniversary of his second inauguration. The proposal is framed as a response to rising affordability pressures on American households, as credit card balances continue to swell.

While details on implementation are yet to be clear, the market impact could be swift. Credit-card companies and banks may already be bracing for a stock reaction if lower rates compress profitability. The effect would not be uniform across the industry. Payment networks such as Visa Inc. V and Mastercard Incorporated MA face a very different risk profile compared with card issuers like American Express Company AXP and Capital One Financial Corporation COF.

All four companies currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A Pitch Rooted in Rising Debt

President Trump floated the idea of a credit-card rate cap during his second presidential campaign, positioning it as a consumer-first measure. According to the New York Federal Reserve, U.S. credit-card debt reached $1.23 trillion in the third quarter of 2025, up 5.75% from a year ago. He took aim at credit-card rates hovering between 20% and 30% under the previous administration.

Supporters argue that a cap could offer meaningful relief amid persistent concerns about household financial stress. By limiting rates to 10%, Americans could save billions of dollars in interest payments over the year, freeing up cash for essentials or debt reduction.

Winners, Losers and Unintended Consequences

The proposal is not without controversy. Several groups warn that lower rates may come at a cost. Credit-card companies could respond by trimming rewards programs or tightening lending standards. Some argue that restricted pricing could reduce credit availability for higher-risk borrowers, including small business owners. This can drive people toward less regulated alternatives and affect consumption in the short run.

There is also a question of consumer behavior. A Vanderbilt Law School analysis estimates potential savings of up to $100 billion annually. Lower rates could trigger faster repayment, shrinking outstanding balances. On the other hand, cheaper credit might lead to additional card usage, increasing spending.

Why Business Models Matter

Visa and Mastercard operate payment networks, earning fees tied to transaction volume rather than interest income. They do not issue cards or assume credit risk. For them, the impact of a rate cap would likely be indirect. Reduced credit availability could weigh on transaction growth in the short term, but improved affordability could eventually lift spending.

Issuers face a more direct hit. American Express, which both issues cards and earns transaction-related fees, relies notably on interest income. In the first nine months of 2025, its interest income rose 7% year over year to $19 billion, while non-interest revenues climbed 8% to $40.4 billion. However, AmEx’s premium customer base provides it with a buffer during volatile economic environments.

But Capital One is significantly exposed. After acquiring Discover Financial Services, its lending footprint expanded further. In the third quarter alone, Capital One posted a 24% surge in net interest income to $12.4 billion, with net interest margin widening 74 basis points to 8.36%. At the quarter-end, its Credit Card period-end loans increased to $271 billion. Over the first three quarters of 2025, its total credit card net charge-off rate was 5.17%.

The Bigger Picture

Banks are widely expected to challenge the proposal in court, arguing it undermines credit access and distorts market pricing. Legal action could delay or block execution. Even if enacted, assuming the cap is limited to one year, it may cause limited damage, but it highlights how regulatory risk can reshape sentiment quickly.

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