Amex CEO: 10% rate cap would create 'downward spiral'

• Key insights: Amex's earnings beat analyst estimates on revenue but missed on EPS. 
• What's at stake: Amex is in the midst of a refresh of its premium card products. 
• Forward look: Amex CEO Steve Squeri expressed opposition to Trump's proposed 10% rate cap, saying it would cause a "downward spiral." 

American Express CEO Steve Squeri joined the chorus of credit card executives expressing concerns about President Donald Trump's pressure on card fees. 

 "Affordability is important. I don't think a 10% cap is the answer to that," Squeri said during Friday's Amex earning call. "It would reduce the number of cards in the marketplace." 

Trump has called for a  one-year, 10% cap on credit card rates while endorsing the Credit Card Competition Act. While Trump does not have the authority to unilaterally set interest rates and the CCCA has been stalled for years, card executives are under pressure to respond.

Worry about the cap

Visa CEO Ryan McInerney and Mastercard CEO Michael Miebach both stressed their opposition to the CCCA during this week's earnings calls. Analysts asked Squeri about Trump's 10% cap threat on Friday."America runs on credit. This cap will impact small business users and it would have the effect of a downward spiral. I don't think that's the answer," Squeri said. Despite Squeri's concerns, analysts at William Blair said the administration's pressure would not hurt Amex. 

"We believe a one-year 10% cap on credit card interest rates would negatively impact consumers' access to credit, yet Amex's focus on the premium market could mitigate exposure relative to the industry," the analysts said in a research note Friday morning. According to the most recent Amex master trust data, 68% of Amex accounts in the trust were paid in full every month, and 55% of receivables in the trust came from consumers with at least a 760 FICO score, according to William Blair. 

"We understand American Express could benefit from the Credit Card Competition Act as it could theoretically serve as a second network alternative; however, technical implementation, and Congress's appetite for passage, is less certain," the analysts said.

Amex's earnings

Amex reported earnings per share of $3.53 in the fourth quarter, compared to $3.04 for the prior year, and total revenue net of interest expenses of $18.98 billion, compared to $17.18 billion the year before. EPS fell short of FactSet analyst projections of $3.54 per share and revenue beat analysts expectations of $18.92 billion. Net income was $2.46 billion, up from $2.17 billion.  

For 2026, Amex projects revenue growth of 9% to 10% and EPS between $17.30 and $17.90, compared to analyst consensus estimates of $17.43. 

During the earnings call, analysts also questioned Squeri about the company's premium card refresh, including expanded benefits for hotels, restaurants, ride-sharing apps and other features. The refresh boosts the average fee to $895 from $695. Amex said the increases are amortized over a year.

Amex's costs tied to loyalty and rewards are increasing during the refresh. Amex reported card member rewards were $4.80 billion in the fourth quarter, up from $4.34 billion the prior year,"We're happy with the overall engagement," Squeri said, saying travel and restaurant spending is up since September. 

Amex regularly updates its card portfolio, usually a mix of card and site redesigns and either new or updated incentives, with about 200 upgrades since 2019. Amex's latest upgrades come as large banks update their premium cards. Citi's Strata Elite is designed to compete with premium cards from Amex, Capital One and JPMorganChase. Chase recently refreshed its Sapphire card with new travel, fitness and experience perks, and higher fees.

"Cardmember Services costs are increasing due to costs associated with the refresh," Jeffries analyst said in a research note. "However, we believe the company has multiple levers to drive account growth and customer engagement while generating attractive returns.