Trump’s credit card limit could hurt consumers, Mastercard stock plummets – Mastercard (NYSE:MA)

Mastercard Inc (NYSE:MA) Stocks fell on Tuesday after credit card stocks retreated following comments from JPMorgan Chase’s CFO Jeremy Barnumwho warned the president Donald Trump’s The proposed cap on credit card interest rates would ultimately hurt consumers and the broader economy.

Important details to know: Trump introduced a one-year cap that would cap credit card interest rates at 10% starting Jan. 20, rattling bank stocks.

Why credit card limits can be economically counterproductive

“If this were to happen, it would be very bad for consumers and very bad for the economy,” Barnum told reporters on Tuesday, noting that JPMorgan would be forced to significantly scale back its credit card business, Reuters reported. He argued that the policy would have “exactly the opposite effect” of what the government intends.

The concern is that credit cards are a major profit driver for banks. Lenders charge high interest rates to offset the risk of unsecured loans.

Are consumers ready for major credit restrictions?

Financial groups, blindsided by the proposal, quickly came back with data showing that millions of households and small businesses could lose access to credit if lenders pull out.

A major banking group said a 10% cap would sharply reduce the availability of credit and be “devastating” for families and small business owners who rely on credit cards for daily financing.

Analysts say the uncertainty is enough to put pressure on credit card issuers and payment networks.

MA Price Action: Mastercard shares were down 3.38% to $547.16 at the time of publication Tuesday, according to Benzinga Pro.

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