U.S. and UK banks fall as Trump proposes 10% credit card interest rate cap, threatening revenue and spooking investors ahead of earnings reports

U.S. and UK financial stocks fell sharply on Monday after former President Donald Trump called for a 10 per cent cap on credit card interest rates, a move analysts say could threaten a significant revenue stream for banks.

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Shares of top U.S. lenders were hit hard, with JPMorgan Chase down 2.5 per cent, Bank of America falling 1.6 per cent, Citigroup declining 3.7 per cent, and Wells Fargo dropping 1.5 per cent.

In the UK, Barclays shares touched a near one-month low, sliding 2.2 per cent.

Consumer finance companies were particularly affected.

Synchrony Financial, Bread Financial, and Capital One all fell between 8 and 11 per cent, while American Express lost 3.8 per cent.

Payment processors Visa and Mastercard each declined 1.8 per cent.

Analysts cautioned that the proposed cap, scheduled to take effect on 20 January, faces substantial legal hurdles.

“It would take an Act of Congress for such rate caps to be in place, given the overwhelming legal challenges an executive order would likely face,” noted UBS Global analysts.

Market experts also warned that a rate limit could push banks to reduce credit limits or close accounts for borrowers with lower credit scores, potentially driving consumers toward higher-cost, alternative lenders. U.S. credit card interest rates averaged 20.97 per cent in November, according to the Federal Reserve.

Investors will be closely monitoring commentary from bank executives as the U.S. financial sector reports fourth-quarter earnings this week.

JPMorgan is scheduled to report on Tuesday, followed by Bank of America, Citigroup, and Wells Fargo later in the week.

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The announcement underscores growing concerns over regulatory interventions in consumer finance and their potential impact on global banking markets.