Credit card companies are under bipartisan attack in Washington as inflation lingers and many Americans struggle to make ends meet. Economic uncertainty has even led President Donald Trump and Sen. Bernie Sanders to pursue ways to lower the annual percentage rates consumers pay. Capital One and other major credit card issuers are under a barrage of political rhetoric and are holding back to see what action will be taken, how it will reshape the industry and how it will affect lending appetite across income groups. After President Trump called for a 10% annual cap in late January, calls to curb APR rose again. Last week, Sanders, a longtime Vermont independent and harsh critic of the Republican president, called for a permanent cap on credit card interest rates of 15%. In a Fox News op-ed, Sanders accused President Trump of paying lip service to the issue of affordability. But the senator also wrote, “I have to admit, there is one issue that President Trump has identified that does make sense. He is right that big banks are ripping off Americans with outrageously high credit card interest rates.” Missouri Republican Sen. Josh Hawley said last month that Congress should pass a bill he introduced with Sanders in February 2025 that would cap credit card interest rates at 10% for five years. Sen. Elizabeth Warren, D-Mass., has also been vocal about capping credit card interest rates, pressuring the Trump administration to support efforts in Congress to do so. Wall Street analysts and executives worry that squeezing credit card issuers like Capital One could reduce their appetite for lending and ultimately cut off access to credit for low-income households who need it most. JPMorgan CEO Jamie Dimon said President Trump’s proposed 10% cap would be an “economic disaster” and would “significantly” reduce credit access for 80% of Americans. “The people who will be crying the most will not be the credit card companies, but the restaurants, the retailers, the travel companies, the schools, the local governments, because people are going to default on their water bills,” Dimon said at the World Economic Forum in Davos last month. Asked for comment, a Capital One spokesperson pointed to CEO Richard Fairbank’s comments about President Trump’s proposed cap during a January earnings call. Fairbank said if implemented there would be “multiple shocks across the economy” and even “the possibility of a recession.” “This will happen because we and the industry will be forced to immediately reduce credit lines, limit accounts, and limit new originations to a small number of consumers.” He added that “consumers are the backbone of the U.S. economy,” and that more than two-thirds of U.S. gross domestic product (GDP) comes from consumer spending, with “$6 trillion of that spending coming from credit cards.” If credit card giants like Capital One and JPMorgan are unable to charge premiums to offset default risk, they are likely to tighten lending standards for subprime borrowers. “A permanent cap is not a starter because it would effectively eliminate most revolving facilities for unsecured credit,” Mark DeVries, an analyst at Deutsche Bank, told CNBC. “We’re going to get out of the business because the return on capital is so low.” While a one-year cap is feasible but “uneconomic” for Capital One, a long-term cap would “wipe out a very significant portion” of the company’s revenue, DeVries said. Credit cards accounted for about 74% of Capital One’s total revenue last quarter, with the majority coming from interest on customer balances. Keefe, Bruyette & Woods estimates that earnings per share for credit card issuers like Capital One could decline by about 25% or disappear entirely, potentially resulting in losses. Analysts at the firm said Capital One is one of the most vulnerable companies in the industry, given its reliance on interest income and large exposure to credit card loans. Further complicating matters, the proposed cap follows Capital One’s $35 billion acquisition of Discover last June, a deal crucial to the club’s investment policy. Discover has brought in billions of dollars worth of credit card balances, which will be similarly affected by interest rate caps. Discover also includes a payment network that Capital One can leverage to reduce its dependence on Mastercard and Visa, moving it closer to American Express, a company that acts as both card issuer and payment system. Capital One’s lack of a payment network is less scary. COF 5Y Mountain Capital One 5 Years To be sure, it remains to be seen whether President Trump’s credit card interest rate cap will actually be implemented. President Trump initially set a January 20 deadline, but there has been little announcement from the White House on the matter since then. Additionally, interest rate caps on credit cards would require Congressional approval. The market also seems to have doubts about that possibility. President Trump’s comments hurt Capital One stock, which has fallen 14% since the beginning of the year. Stocks reversed higher on Friday as concerns about the threat posed by artificial intelligence to the financial sector lingered early in the session. Jeff Marks, director of portfolio analysis at Investing Club, said on Friday that he may consider picking up stocks that are weaker as a result in the coming sessions. That said, given that interest rates are Capital One’s main source of revenue, early 2026 bearishness on Trump is still a fairly small loss. Additionally, the stock has seen an impressive three-year increase, rising 36% in both 2025 and 2024, and 41% in 2023. Conclusion For now, we will continue to monitor updates and do not intend to make any sudden moves regarding Capital One. In a status quo scenario, we still like this setup because the deal with Discover will bring billions of dollars worth of cost and network operational efficiencies, increasing the company’s profitability. This acquisition should lead to aggressive stock buybacks. If that wasn’t enough, management also announced plans last month to acquire San Francisco-based fintech company Brex for $5.15 billion. The acquisition is expected to close in mid-2026 and is aimed at increasing Capital One’s competitiveness in the lucrative corporate cards market. (Jim Cramer’s Charitable Trust has a long COF. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
