President Donald Trump has unveiled a series of initiatives over the past two weeks to address the ongoing affordability crisis affecting millions of Americans, including proposing a cap on credit card interest at 10% on January 9. The news hit credit card stocks hard, triggering a widespread sell-off, including American Express (AXP).
A 10% cap on interest charged by credit card issuers would undeniably mark a significant change, givenBankratecalculates the average rate as of January 14 is 19.6%. A cap on credit card interest would pose a substantial risk to issuers that rely heavily on interest for revenue and profits.
However, veteran technical analyst Bob Lang says selling American Express shares because of an interest rate cap is mistaken, as it’s far more reliant on fees than rivals like Synchrony Financial (SYF).
“While you can carry a balance on some AMEX cards with ‘Pay over Time,’ most associate the card with balances paid off each month, that carry higher annual fees,” wrote Lang in a TheStreet Pro post.
Despite the difference, American Express shares are down 7.3% from last week’s highs, including a 4.3% tumble on January 12. That’s worrisome, but Lang thinks the recent sell-off creates a buy-the-dip opportunity investors should consider.
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Analyst says American Express could be a buy after its drop
American Express makes money from its credit cards, but there are key differences between it and rival issuers, such as Synchrony Financial.
For instance, while Synchrony Financial relies heavily on no-fee, high-interest credit cards, targeting lower- to higher-income households and store- and branded cards, American Express has historically focused on higher-income households willing to pay annual fees in exchange for credit card perks.
The focus on the premium card market and fee revenue is a differentiator that Lang thinks investors have overlooked in the wake of the White House proposal, suggesting they have thrown the proverbial “baby out with the bath water” by indiscriminately selling all credit card stocks.
Credit card statistics (January 2026):
- Number of credit cards in America: 1.27 billion, according to Capital One.
- Total outstanding balance on credit cards: $1.23 trillion, reports the New York Federal Reserve.
- Average credit card interest rate (all cards): 19.64%, according to Bankrate.
- Average credit card interest rate (new cards): 23.79%, reports LendingTree.
“Capping credit card interest rate fees is not something that will hurt AXP much, so any selling off that news would be a buying opportunity,” wrote Lang.
Lang, a technical analyst who studies price history for clues to what could happen to stock prices next, says American Express’ stock price chart “looks great.”
“The top of the chart shows a pullback to reliable support, the 100-day moving average,” said Lang. “We should see an attempt to push back above soon, as the company reports earnings on Jan. 30.”
American Express’s secret weapon insulates it against a 10% credit card cap
In addition to fees it collects on its popular platinum card, American Express also pockets a lot of money from retailers who accept American Express cards, giving it another important differentiator to players like Synchrony.
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In fact, swipe fees are the most significant contributor to American Express’ top line, making the one-two punch of high-margin credit card fees and merchant swipe fees powerful.
American Express CFO Christophe Le Caillec explained in the third quarter earnings call how vital the card fee business is to the bank:
American Express revenue grew revenue by 11% year over year in Q3, but card fees grew faster, rising 17% to $2.55 billion after adjusting for currency conversion on overseas revenue. Merchant swipe fee revenue grew 7% to $9.4 billion.
Combined, the two accounted for 65% of American Express’ $18.4 billion in total revenue in the quarter. Interest revenue was $4.49 billion, only about a quarter of its revenue.
American Express’s approach also gives it another secret weapon: its customers are typically higher-income and tend to fall behind less frequently, helping keep write-offs in check. In Q3, American Express’ write-offs were 1.9%, well below Synchrony’s 5.17%.
While a cap on interest could hamstring interest revenue, the hit may not be as bad as some fear. Once the dust settles and investors start picking winners and losers, Lang thinks that American Express shares could rebound, making now a good entry spot for long-term investors.
“A chance to buy the stock lower has finally arrived,” wrote Lang. “We like American Express in TheStreet Pro Portfolio and rate it a Two, or ‘stockpile on pullbacks.'”
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