Affirm Stock Reacts As Trump Aims To Cap Credit Card Rates

Affirm Holdings Inc (NASDAQ:AFRM) shares initially jumped in early trading Monday before giving back gains as investors digested a new source of risk for traditional credit cards. Here’s what investors need to know.

• Affirm Holdings stock is taking a hit today. What’s pressuring AFRM stock?

Trump's Threat: A Game Changer For Credit Markets?

Over the weekend, President Donald Trump warned card issuers that if they do not cut interest rates to 10% by Jan. 20, they will be treated as in "violation of the law" and face "very severe" consequences, calling current 20% to 30% APRs abuse of consumers.

This sharp escalation from policy rhetoric to explicit legal threats sent shares of major card and bank issuers lower and initially pushed investors toward alternative consumer-credit names like Affirm.

What Affirm Is And How Its Business Works

Affirm is a leading buy now, pay later (BNPL) platform. Instead of revolving balances at variable interest rates, Affirm offers installment loans that are approved at the point of sale, often with zero late fees and simple, upfront cost disclosures. The company partners with large merchants and platforms in e-commerce, travel and retail, integrating its checkout button online and in stores.

Affirm earns revenue primarily from merchant discount fees and, on some products, consumer interest income that is funded via bank partners and securitizations. Its model is built around underwriting each transaction individually and giving consumers a fixed payoff schedule rather than open-ended revolving credit.

Why A 10% Credit Card Cap Could Benefit Affirm Over Time

If a 10% APR cap were enforced, legacy card issuers' economics would be squeezed, likely forcing them to cut rich rewards programs, tighten credit or add more fees. That could reduce the appeal and availability of revolving credit, especially for sub-prime and younger consumers, pushing merchants to seek alternative financing tools that still drive conversion.

Because Affirm charges merchants rather than relying solely on high consumer APRs, it could remain economically viable where capped credit cards struggle, allowing BNPL to gain share at checkout.

Even if the ultimatum is softened or challenged, the political focus on "affordability" and perceived abuses by card companies supports the narrative that transparent, installment-based products like Affirm's are a consumer-friendly alternative, positioning AFRM as a potential long-term beneficiary of any structural reset in U.S. credit card pricing.

Benzinga Edge Rankings: Benzinga Edge ranks Affirm with exceptionally high growth and momentum scores — 98.33 and 85.55 respectively — highlighting its strong performance outlook despite low value ratings.

AFRM Analyst Outlook

Analysts have generally maintained a positive outlook on Affirm Holdings, with TD Cowen and Truist Securities reiterating “Buy” ratings, while RBC Capital maintained a “Sector Perform” rating. The most recent action came from TD Cowen, which adjusted its target price to $110.00 from $115.00.

Earlier, Wolfe Research initiated coverage on Affirm with a “Peer Perform” rating. Freedom Capital Markets also began coverage on the firm with a “Buy” rating and a target price of $90.00.

Notably, Truist Securities and RBC Capital both revised their target prices downward to $85.00 and $87.00, respectively.

AFRM Price Action: Affirm Holdings shares were down 6.87% at $76.18 at the time of publication on Monday, according to Benzinga Pro data. The stock has traded in a wide range of $75.25 to $84.65 on Monday.

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