Shares of major financial institutions, including Barclays, JPMorgan Chase, Citigroup, and Bank of America, tumbled on Monday, January 12, 2026, following a proposal by U.S. President Donald Trump to impose a one-year cap on credit card interest rates at 10%. The announcement, made via Trump's Truth Social platform on Friday, triggered a broad sell-off in banking and payment processing stocks, with investors fearing the measure would compress lending margins and restrict credit availability.
The proposed cap is set to take effect on January 20, 2026, though the announcement lacked specific enforcement details. Analysts were quick to point out that the President lacks the unilateral authority to implement such a cap, noting it would likely require congressional approval. "When companies can’t price the risk properly, they’ll just reduce credit lines," warned Brian Jacobsen, chief economic strategist at Annex Wealth Management. Banking advocacy groups echoed concerns that the measure could limit credit access and push consumers toward less regulated, higher-cost alternatives.
The market reaction was swift and severe. In premarket trading, Citigroup shares fell nearly 4%, JPMorgan Chase declined 3%, and Bank of America dropped 2.45%. Payment processors were also hit, with Visa down 1.58% and Mastercard falling 2%. Internationally, London-based Barclays PLC saw its shares slide close to 4%, its largest single-day decline in nearly a month, due to its significant U.S. consumer banking exposure. The broader European banks index fell 1.1%.
Analysts from Raymond James described the legislative risk as "relatively low" but acknowledged it increased after Trump's public statement. They identified the chairmen of the House Financial Services Committee and Senate Banking Committee as key figures to watch. Meanwhile, some analysts suggested the proposal could inadvertently benefit alternative lenders. Mizuho analyst Dan Dolev noted that if banks tighten lending standards, consumers might turn to buy-now-pay-later services like Affirm, SoFi, and Block.
Market nervousness was compounded by separate comments from Federal Reserve Chair Jerome Powell, who stated the Trump administration had threatened him with a criminal indictment, intensifying fears of political pressure on monetary policy. Investors are now focused on two near-term catalysts: any concrete action from the White House before January 20, and upcoming bank earnings, including Barclays' full-year results due February 10.
