Trump targets credit card rates. What’s at stake for Capital One and other banks

Capital One shares dropped more than 6% on Monday after President Donald Trump targeted a key way that our favorite credit card issuer makes money. The weakness in Capital One followed Trump’s call for a one-year, 10% cap on credit card rates to take effect on Jan. 20. In his Truth Social post late Friday , the president did not provide any more details on how such a cap would work. While it would require approval from Congress, Trump told reporters Sunday that if banks don’t act by the deadline, they would be “in violation of the law.” The proposal isn’t entirely surprising, given Trump’s criticism of high credit card rates during his 2024 presidential campaign. Bipartisan bills have also been previously introduced to limit credit card interest rates at 10%, a figure significantly below Bankrate’s reported average of 19.65%. Other credit card firms, including American Express , and buy-now-pay-later companies, such as Affirm , also saw their stocks decline on the news. Wall Street analysts expressed skepticism about Trump’s plan. JPMorgan described the proposal as a “high-severity, low-probability risk” — and, if implemented, “would fundamentally reshape the card industry, substantially reducing profitability for issuers and access to credit for consumers.” JPMorgan did still raise its Capital One price target to $256 from $237 as part of its fourth-quarter consumer finance preview. We’re not making any sudden moves on Capital One, which was off its session lows in afternoon trading. “We’re not selling into this. We’re not necessarily buying it either,” Jeff Marks, director of portfolio analysis for the Club, said during Monday’s Morning Meeting . “We’re just holding here to let the storm clear.” Earlier Monday, during ” Squawk on the Street ,” Jim Cramer said, “Say to yourself, ‘How many companies would issue credit cards knowing a cap of 10%?’ The answer is none, because they’d lose too much money.” It’s not only banks that could take a hit if the cap is implemented. Jim said the economy would, too. Access to credit would tighten with less of an incentive to lend, resulting in consumers spending less or relying on other forms of unsecured debt. “I’m not sure what the president’s game plan is here. If he wants to take the market down, just say it,” Jim added. “That’s a bummer. We’re sitting here thinking the economy’s pretty good, but we have to have the market down because the president’s very unhappy.” In addition to Capital One, Club name Wells Fargo , which also issues credit cards, dropped nearly 1% on the news. CEO Charlie Scharf has described credit cards as a growth lever. That could change. Goldman Sachs , however, would come out unscathed after reaching a deal last week to transition the Apple Card to JPMorgan Chase . Shares of Goldman, also a portfolio name, initially dropped on the Trump proposal but quickly reversed higher. Monday marked a bump in the road after a solid start this year, which had picked up where 2025 left off. Goldman jumped more than 53% last year, while Wells Fargo surged 32%. Capital One secured gains of roughly 35% in 2025. Lower interest rates, a pickup in Wall Street dealmaking, a more lenient regulatory regime, and a resilient U.S. consumer helped investor sentiment. For Capital One, the credit card issuer’s $35 billion blockbuster acquisition of Discover Financial, which closed in May, lifted shares, too. We will be listening closely to commentary from management teams during bank earnings season for their read on the matter. Wells Fargo and Goldman report results on Wednesday and Thursday this week. Capital One is slated to release on Jan. 22. (Jim Cramer’s Charitable Trust is long COF, WFC, GS, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.