Mastercard Inc (NYSE:MA) shares are taking a dip on Tuesday as credit card stocks retreat following comments from JPMorgan Chase CFO Jeremy Barnum, who warned that President Donald Trump's proposed cap on credit card interest rates would ultimately hurt consumers and the broader economy.
Key Details To Know: Trump floated a one‑year cap that would limit credit card interest rates to 10% starting Jan. 20, rattling banking stocks.
Why Credit Card Caps Could Backfire Economically
“If it were to happen, it would be very bad for consumers, very bad for the economy,” Barnum told reporters on a call Tuesday, noting that JPMorgan would be forced to significantly scale back its credit card business, Reuters reported. He argued the policy would have "the exact opposite consequence" of what the administration intends.
The concern is that credit cards are a major profit engine for banks. Lenders charge high interest rates to offset the risk of unsecured borrowing.
Are Consumers Ready For Major Credit Restrictions?
Financial groups, caught off guard by the proposal, quickly pushed back with data showing that millions of households and small businesses could lose access to credit if lenders pull back.
A major banking trade group said a 10% cap would sharply reduce credit availability and be “devastating" for families and small business owners who rely on credit cards for everyday financing.
Analysts say the uncertainty is enough to weigh on credit card issuers and payment networks.
MA Price Action: Mastercard shares were down 3.38% at $547.16 at the time of publication on Tuesday, according to Benzinga Pro.
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