Trump’s Proposed 10% APR Cap Drives Capital One Shares Down 6.5%
President Donald Trump proposed a one-year, 10% cap on credit card APRs effective Jan. 20, prompting Capital One shares to plunge 6.5% intraday. With U.S. credit card APRs near 21% in November 2025, the cap could halve lenders’ interest income if imposed.
1. Capital One Agrees to $425 Million Settlement Over Savings Program Claims
Capital One Financial has reached a revised class-action settlement totaling $425 million to resolve allegations that it misled customers about its 360 Savings high-yield account. A federal judge granted preliminary approval on Monday after rejecting an earlier version of the deal in October. The settlement covers more than 3.1 million account holders nationwide, and Capital One has agreed to enhanced disclosures about interest-rate calculations and fees. If final approval is granted, affected customers can expect average recoveries of approximately $130 each, with individual payments capped at $500. Capital One will also implement a compliance monitoring program overseen by an independent auditor for a period of three years.
2. Shares Drop Nearly 6.5% on Proposed 10% Credit Card Rate Cap
On Friday, Capital One shares declined by 6.5% in midday trading after the White House announced a plan to cap credit card annual percentage rates (APRs) at 10% for one year beginning January 20. According to the Federal Reserve, the average APR on U.S. credit cards was just under 21% as of November 2025, underscoring the impact such a cap could have on interest income. Analysts estimate that a 10% ceiling would reduce Capital One’s net interest margin by up to 150 basis points, potentially cutting quarterly interest revenue by $300 million. Major industry groups warn that the cap could curb lending to higher-risk consumers and weigh on consumer spending growth.
3. Implementation Challenges and Investor Implications
Legal experts and industry observers note that imposing a 10% rate cap within a few weeks presents significant administrative hurdles. Credit card issuers adjust APRs monthly based on credit risk, and enacting a uniform cap may require regulatory rule-making or emergency executive action. If implemented, the cap could prompt portfolio shifts toward unsecured personal loans or co-branded cards with alternative fee structures. Some investors view the share price pullback as a buying opportunity, citing Capital One’s $159 billion market capitalization, 1.04% dividend yield, and strong capital ratios, while others brace for potential volatility until regulatory details are clarified.