Sign at the entrance to a Capital One Bank branch in Manhattan.

Erik Mcgregor | Lightrocket | Getty Images

Banks and financial services stocks slid Monday after U.S. President Donald Trump called for a 10%, one-year cap on credit card interest rates.

Capital One shares dropped 6% in midday trading and Synchrony Financial tumbled more than 8%. Credit cards account for a large share of both banks' business models. Other banks that are more diversified saw smaller losses. Citigroup lost almost 4%, JPMorgan Chase and Bank of America fell 2%, as did Visa and Mastercard, credit card payments processors that don't put any of their capital at risk.

Other financial services names were caught in the downdraft. American Express slumped 4%, while Wells Fargo declined about 2%.

The proposed cap would come into force on Jan. 20, according to a post on Truth Social on Friday, though Trump didn't provide details on how it would work.

"Effective January 20, 2026, I, as President of the United States, am calling for a one year cap on Credit Card Interest Rates of 10%," Trump wrote, echoing a pledge he made in the 2024 presidential campaign.

"Please be informed that we will no longer let the American Public be 'ripped off' by Credit Card Companies," he added.

A cap would require approval from Congress. There has long been interest in curbing fees, and bipartisan bills to cap credit card interest rates at 10% have previously been introduced, highlighting potential appetite for the move.

When asked about his post, Trump said Sunday to reporters that if banks don't limit rates they would be "in violation of the law."

Critics said over the weekend that Trump's plan, if enacted, would cause banks to pull back on lending, causing many consumers to lose access to credit and dampening personal spending, which accounts for roughly two-thirds of all economic activity.

Bank industry insiders say the White House proposal would have unintended consequences for consumers and the American economy.

The move would make large swaths of the credit card industry unprofitable, especially tied to customers with less-than-ideal credit profiles, according to banks and analysts. Rather than offer unprofitable products to consumers, the industry would simply stop offering access to customers with subprime credit, and make other changes in card programs, including scaling back rewards, insiders say.

Consumers would either spend less or rely on other forms of unsecured debt, they say.

Buy-now-pay-later stocks were higher in early trading on the notion more consumers would be forced to use those lenders if banks pulled back on extending credit, but soon gave back those gains after the market formally opened.

Affirm Holdings slid more than 6% after rallying in premarket trading, and PayPal fell about 1%.

— CNBC's Hugh Son contributed reporting

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