Shares of Affirm Holdings (NASDAQ:AFRM) climbed about 3% on Monday morning after U.S. President Donald Trump floated the idea of imposing a temporary cap on credit card interest rates.
Trump said on his Truth Social platform that he wants to introduce a one-year ceiling of 10% on credit card interest rates starting January 20. The proposal sparked a sharp market reaction, with investors rotating toward buy-now-pay-later and personal loan providers, while selling traditional banks and credit card issuers.
Major U.S. banks traded lower in premarket dealings, with Citigroup (NYSE:C) down around 4%, JPMorgan Chase (NYSE:JPM) off about 3%, and Bank of America (NYSE:BAC) slipping roughly 2.5%. Losses were steeper among card-focused lenders: American Express (NYSE:AXP) fell 4.8%, Capital One (NYSE:COF) dropped 8%, while consumer finance firms Synchrony Financial (NYSE:SYF) and Bread Financial (NYSE:BFH) declined between 10.5% and 11.6%.
Mizuho analyst Dan Dolev said the proposal could significantly reshape the lending landscape, writing, “President Trump’s tweet on Truth Social demanding a one-year 10% cap on credit card interest rates could have major positive ramifications for BNPL and personal loan providers like AFRM, UPST, SOFI, XYZ & PYPL.”
Analysts noted that if a cap were implemented, consumers with weaker credit profiles could be pushed toward alternative lending platforms, as banks may respond by tightening underwriting standards. Potential beneficiaries highlighted by the market include Affirm, Upstart Holdings (NASDAQ:UPST), SoFi Technologies (NASDAQ:SOFI) and PayPal (NASDAQ:PYPL), all of which offer BNPL or personal loan products.
However, Evercore ISI analyst Sarah Bianchi cautioned that any such move would likely face legislative hurdles. She noted that the National Bank Act currently permits credit card issuers to charge interest based on the maximum rate allowed in the state where the bank is chartered, meaning new legislation would probably be required to enforce a nationwide cap.