Top Analysts Recommend Credit Card Stocks as Market Resilience Outshines Trump Policy Risks

Credit card stocks are under heavy pressure this week after President Trump criticized the industry for “ripping off” U.S. consumers with high interest rates and swipe fees. On Friday night, he called for a one-year cap on credit card interest rates at 10% beginning January 20, intensifying scrutiny on issuers. By Tuesday morning, Trump further escalated the situation by endorsing the Credit Card Competition Act, which would require large banks to support at least two payment networks only one of which could be Visa or Mastercard, the dominant players in the U.S. market.

The impact on Wall Street has been immediate. Visa (V) shares have dropped 7%, while American Express (AXP) is down 5% since the start of the week. Mastercard (MA) has also declined about 5% over the same period, making these three companies some of the worst performers in the Dow Jones Industrial Average. Analysts note that regulatory uncertainty and interest rate caps are weighing heavily on investor sentiment, raising questions about the near-term profitability of credit card issuers.

Experts remain skeptical about the chances of Congress or the Trump administration successfully implementing an interest rate cap or sweeping payment network reforms. While headlines have fueled short-term volatility, history shows that markets often exaggerate the financial impact of such proposals. For investors, this pattern suggests that current weakness in credit card stocks could present meaningful upside opportunities for dip buyers, as issuers have consistently adapted to regulatory challenges and maintained long-term growth.

William Blair analysts advised long-term investors to accumulate shares of Visa, Mastercard, and American Express during the current weakness driven by policy uncertainty. While they acknowledge near-term downside of 10% 20% due to compressed multiples, they believe Visa and Mastercard can offset lower processing fees and lost volume. Importantly, they expect no material change to U.S. payment system economics, reinforcing confidence in the sector’s resilience.

Citigroup analysts echoed this sentiment, emphasizing that history favors investors who buy into sell-offs triggered by fears of business model changes. They referenced the Durbin Amendment, part of the Dodd-Frank Act, which capped debit card transaction fees and imposed network requirements similar to those proposed in the Credit Card Competition Act. Despite initial uncertainty, Visa and Mastercard shares rebounded strongly after the amendment’s enactment in 2010, underscoring the long-term strength of credit card stocks even under regulatory pressure.

Jefferies analysts emphasize that despite the Durbin Amendment requiring two unaffiliated networks on all debit cards, interchange rates did not decline meaningfully. Visa and Mastercard adapted by finding ways to recoup lost fees, strategies they could expand if similar rules are applied to credit cards. This adaptability highlights the companies’ ability to sustain profitability even under regulatory pressure.

The long-term performance of these stocks underscores their resilience. Visa and Mastercard shares rose double digits in the year following the passage of Dodd-Frank. Over the past 15 years, Visa has gained 1,700% and Mastercard 2,600%, far outpacing the S&P 500’s 550% return. This track record demonstrates the strength of credit card networks in navigating regulatory challenges while delivering outsized returns to investors.

Despite near-term volatility from Trump’s proposed interest rate cap and the Credit Card Competition Act, analysts emphasize that history favors long-term investors in Visa, Mastercard, and American Express. Past reforms like the Durbin Amendment initially pressured payment networks, but issuers adapted quickly, recouped lost fees, and delivered outsized returns compared to the broader market.

The takeaway is clear: while uncertainty may compress valuations in the short run, the fundamentals of credit card networks remain strong. For investors, current weakness could represent an opportunity to accumulate shares in companies that have consistently outperformed the S&P 500 over the past 15 years, proving their resilience against regulatory challenges.