Stocks of major credit card issuers such as Mastercard (MA) are plunging after U.S. President Donald Trump called for a one-year cap on interest rates of 10%.
Shares of Capital One (COF) are down 10% on Jan. 12, while American Express (AXP) is down 5% and Visa (V) and Mastercard are each down about 2%.
Trump said on social media that the interest rate cap of 10% on all credit cards issued in the U.S. would come into force on Jan. 20., though he didn’t provide any further details.
“Please be informed that we will no longer let the American Public be ‘ripped off’ by Credit Card Companies,” wrote Trump on social media.
When asked about his social media post, Trump said to reporters over the weekend that if banks don’t limit the interest rates charged on credit cards they will be “in violation of the law.”
A cap would require approval from the U.S. Congress. There has long been interest in curbing fees, and bipartisan bills to cap credit card interest rates at 10% have previously been drafted.
However, any attempts to limit credit card interest rates have largely gone nowhere due to the powerful banking lobby in Washington, D.C.
Currently, the average interest rate charged on credit cards in the U.S. is 21.5%, although it can be as high as 28% or 30%, according to industry and consumer data.
Critics were quick to warn that Trump’s plan, if enacted, would likely cause credit card issuers and banks to pullback on lending, causing many consumers to lose access to credit.
Mastercard’s stock has risen 14% over the last 12 months to trade at $575.54 U.S. per share.
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