A surprise social media post from President Donald Trump calling for a one-year cap on credit card interest rates at 10% sent shockwaves through financial markets Monday morning, triggering the largest single-day decline in bank stocks since the regional banking crisis of 2023.

Capital One Financial, whose credit card business represents the vast majority of its revenue, plunged nearly 10% in premarket trading. Citigroup, another major credit card issuer, fell 4%, while JPMorgan Chase, Bank of America, and Wells Fargo all dropped more than 2% ahead of the opening bell.

The Presidential Proposal

Trump's post, published late Sunday evening, argued that American families are being "crushed" by credit card interest rates that commonly exceed 20% or even 30% for consumers with less-than-perfect credit. The president characterized the one-year rate cap as a temporary measure to "give hardworking Americans a break" while his administration works on longer-term solutions to consumer debt.

"Credit card companies are making record profits while families struggle to pay their bills," Trump wrote. "A 10% cap for one year will save American households billions of dollars and force these companies to compete on service, not on squeezing every last penny from the working class."

Wall Street's Immediate Reaction

The proposal, if enacted, would represent a seismic shift in the credit card industry. The average credit card interest rate currently stands at 20.7%, according to the Federal Reserve's most recent data, meaning a cap at 10% would effectively cut industry revenues in half on existing balances.

Bank analysts scrambled to quantify the potential impact. A preliminary estimate from Goldman Sachs suggested that a 10% rate cap maintained for a full year could reduce the combined earnings of the six largest credit card issuers by $45 billion to $55 billion, assuming no changes to lending behavior.

"This would be the most significant regulatory intervention in consumer credit since the Credit Card Act of 2009, and potentially more impactful in terms of industry economics."

— Chris Kotowski, Oppenheimer Senior Banking Analyst

Buy-Now-Pay-Later's Big Moment

While traditional lenders reeled, shares of buy-now-pay-later companies surged on the news. Affirm Holdings jumped 4% in premarket trading, while Klarna—which recently filed for an initial public offering—is expected to see renewed investor interest.

The logic is straightforward: if banks tighten credit card lending in response to rate caps, consumers may turn to alternative financing options. Buy-now-pay-later services, which typically charge merchants rather than consumers and often offer interest-free payment plans, could capture market share from traditional credit.

"If you're a consumer who suddenly can't get a credit card because banks are pulling back, BNPL becomes your lifeline," explained Sarah Chen, a fintech analyst at Wedbush Securities. "This could accelerate the shift we've been tracking for years."

The Constitutional Question

Legal experts immediately raised questions about whether the president has the authority to impose such a cap unilaterally. Credit card interest rates are primarily governed by state usury laws and federal regulations administered by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.

Some constitutional scholars suggested Trump might attempt to use executive authority under consumer protection statutes, though such an approach would almost certainly face immediate legal challenges from the banking industry.

"There's no clear statutory basis for the president to impose rate caps by executive order," said Lawrence Summers, former Treasury Secretary. "This would require Congressional action, and even then, there are serious questions about whether federal rate caps would survive judicial scrutiny."

Industry Response

The American Bankers Association issued a statement within hours of Trump's post, warning that rate caps would backfire on the very consumers they're intended to help.

"Arbitrary rate caps will not protect consumers—they will eliminate credit access for millions of Americans who depend on credit cards for emergencies and everyday expenses," the statement read. "History shows that when lending becomes unprofitable, lenders stop lending. The result would be fewer credit options, not lower costs."

The Consumer Bankers Association echoed these concerns, noting that credit card issuers price interest rates based on the risk profile of borrowers. A blanket 10% cap would make it economically unfeasible to extend credit to higher-risk consumers, potentially pushing them toward predatory lenders or loan sharks.

What This Means for Consumers

For consumers currently carrying credit card debt, the proposal—if enacted—could provide significant relief. The average American household with credit card debt owes approximately $7,900, according to TransUnion data. At the current average rate of 20.7%, that balance generates roughly $1,635 in annual interest charges. A 10% rate would cut that to about $790, saving the typical indebted household over $800 per year.

However, consumer advocates cautioned that the secondary effects could prove more damaging for many households. If credit becomes harder to obtain, families without substantial savings could find themselves unable to cover emergency expenses or manage cash flow gaps.

The Earnings Season Complication

The timing of Trump's announcement creates additional complexity. Major banks are set to report fourth-quarter earnings this week, with JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America all scheduled to release results. Investors will be parsing management commentary for any indication of how banks might respond to rate cap proposals.

Even without formal action, the mere threat of rate caps could influence bank strategy. Some analysts suggested that credit card issuers might begin tightening underwriting standards preemptively, reducing their exposure to the business before any policy changes take effect.

Historical Context

Interest rate caps have a complicated history in American finance. During the 1980s, when inflation pushed rates to historic highs, several states maintained usury laws that limited credit card rates. The result was that major banks relocated their credit card operations to states like South Dakota and Delaware that had eliminated or raised rate caps, effectively nationalizing credit card interest rates.

The Supreme Court's 1978 Marquette decision allowed banks to export their home state's interest rate to customers nationwide, enabling this regulatory arbitrage. Any federal rate cap would override this structure, representing a fundamental restructuring of the credit card market.

Market Outlook

As markets opened Monday, the uncertainty surrounding Trump's proposal added to an already volatile environment. The Federal Reserve's upcoming policy meeting, ongoing geopolitical tensions affecting oil prices, and the approaching earnings season have combined to create what strategists describe as a "high-anxiety" market.

Bank stocks were already facing pressure from expectations of fewer interest rate cuts in 2026 than previously anticipated. The credit card rate cap proposal adds another layer of uncertainty to an already complex investment thesis for the financial sector.

For now, investors are treating the proposal as a significant but uncertain risk. The path from presidential social media post to enacted policy is long and uncertain, but the market impact was immediate and substantial.