Bank Stocks Slide as Rate Cap Talk, Fintech Pressure Hit Sector
Major card issuers like JPMorgan and Bank of America face a dual threat from political calls for a 10% APR cap and competitive disruption from players like Bilt.
Shares of major U.S. banks tumbled in Wednesday trading as the highly profitable consumer credit sector confronts a growing pincer movement of political pressure on interest rates and intensifying fintech competition.
Bank of America (BAC) saw its stock fall by 5.1%, while Wells Fargo (WFC) dropped 5.6%. Citigroup (C) and JPMorgan Chase (JPM) also registered significant declines of 4.4% and 1.4% respectively, as investors weigh new threats to the lucrative credit card business that has long been a bedrock of consumer banking profits.
The pressure escalated this week following reports of a proposal from former President Donald Trump to impose a one-year, 10% cap on credit card interest rates. The move has amplified a broader debate over high consumer borrowing costs at a time when average credit card APRs for new offers hover above 23%, according to data from LendingTree.
Top banking executives were quick to push back against the proposal's feasibility. During a company earnings call, Bank of America CEO Brian Moynihan warned that such a cap would severely “restrict access to credit” for consumers who rely on it. JPMorgan’s CFO made similar remarks, signaling the industry’s unified opposition to a policy that would fundamentally alter the risk-and-reward model of unsecured lending.
Adding to the industry's headwinds, rewards-focused fintech company Bilt formally unveiled its new credit card lineup, marking a strategic pivot away from its original issuer, Wells Fargo. The bank’s partnership with Bilt was reportedly unprofitable, with some reports suggesting it cost Wells Fargo as much as $10 million a month.
Bilt, which built its brand by allowing users to earn rewards on rent payments, is launching three new cards with a new issuer, Cardless. The new products, which carry annual fees ranging from $0 to $495, will expand the rewards program to include earning points on mortgage payments. This move highlights a different kind of competitive threat: agile fintechs are innovating on rewards and value propositions, forcing incumbents to either compete on costly terms or lose market share.
The transition underscores the strategic challenges facing large banks. While the Bilt partnership did not work out for Wells Fargo, the fintech’s ability to quickly pivot to a new issuer and launch an enhanced product line demonstrates the ongoing disruption in the sector. According to Bilt's transition plan, the new cards will officially launch on February 7, 2026.
For decades, the credit card portfolios of giants like Chase, Citi, and Bank of America have been reliable profit engines, balancing the risk of defaults with high-margin interest income from revolving balances. Now, that model is being squeezed from both ends. On one side, there is a populist political movement targeting high APRs, which could lead to regulatory intervention. On the other, fintech innovators are chipping away at customer loyalty with unique rewards and nimbler platforms.
While the 10% cap proposal remains speculative, it has clearly unsettled a market already grappling with mixed earnings and a complex economic outlook. For investors, the question is whether the established giants of American banking can adapt quickly enough to defend one of their most important financial territories.