By Nate Wolf
President Donald Trump's plan to cap interest rates on credit cards could give a bump to personal lenders and buy now, pay later providers like Affirm Holdings and SoFi Technologies, according to analysts at Mizuho Securities.
Trump claimed in a social media post on Friday that Americans are being "ripped off" by credit card companies and vowed to put a one-year, 10% cap on rates effective Jan. 20. Average U.S. card APRs hover around 20% today.
If enacted -- still a big "if" -- the policy could result in tighter lending standards and stronger demand for alternative credit. That would mean "major positive ramifications for BNPL and personal loan providers, " writes Mizuho analyst Dan Dolev in a research note Monday.
On the BNPL side, Affirm stock rose 3.2% on Monday, while Block jumped 1.8% and PayPal Holdings was up 0.9%. Among alternative lenders, SoFi stock was up 0.3% and Upstart Holdings climbed 1.3%. Bank and credit card stocks slumped.
Trump's proposed cap would force banks to reduce credit lines to low-credit consumers, Mizuho said. Roughly 50% of U.S. consumers have a FICO score below 745, where interest rates tend to be higher, the firm estimated.
Fintech names provide an obvious alternative. Consumer lending drives a significant portion of business at these companies, including 100% of business at Affirm and Upstart and 80% to 90% at SoFi. Some, like Upstart and Block, focus specifically on lower-FICO customers.
"We believe this demand could create a significant volume growth opportunity," Dolev wrote. "This should translate to net revenue, assuming they will know how to underwrite and positively select the new borrowers converting to them."
That rush of new demand isn't a foregone conclusion. A law capping interest rates has a "very low chance" of passing, analysts at Wells Fargo said in a weekend research note. The Treasury Department wants banks to lend more, the firm noted, and this policy would nearly eliminate credit card profits.
"To us, good economics equates to good politics, and this move would seem to hurt credit availability and GDP," the Wells Fargo team wrote.
But if Monday's stock moves are any indication, Wall Street is taking the proposal seriously. Banks' losses could be Affirm and SoFi's gain.
Write to Nate Wolf at nate.wolf@barrons.com
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January 12, 2026 08:41 ET (13:41 GMT)
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