Trump proposes 10% limit on credit card interest: negative reactions from the US banking sector
Limiting interest rates on credit cards could reduce access to credit and negatively impact consumers and the US financial market.
US President Donald Trump declared a few days ago that American credit card companies may be subject to a 10% limit on the interest rate applicable to customers.
There was immediate alarm among US banks, which was also reflected in the stock market, where the stocks of several US banks, including Citigroup, JPMorgan Chase, Wells Fargo and Bank of America slid down between 1% and 3% on Monday 12.
The companies most closely linked to the credit card industry, such as Visa, Mastercard and American Express, also fell. Capital One, whose loan portfolio comes mainly from credit cards, even plummeted by almost 7%.
Although it is unclear how the proposed rule could be implemented, the industry's message is clear: the plan would have unintended consequences for consumers and the US economy.
According to banks and analysts, the move would in fact render large parts of the credit card industry unprofitable, especially those linked to customers with sub-optimal credit profiles.
