Banks hit credit card users with higher rates in response to regulation that may never arrive

The increase in APRs and fees by credit card issuers can negatively affect consumer spending and increase credit risk, leading to potential declines in these banks' profits. If consumers start defaulting on payments due to higher borrowing costs, it could strain the financial portfolios of these banks.

The anticipated regulation failure may lead to a period of uncertainty for banks, impacting their credit card operations significantly. Analysts suggest that if consumer borrowing decreases due to higher costs, banks like Bread Financial that rely on such customers may experience earnings pressure.

As interest rates rise and borrowing costs increase, consumers might gravitate towards larger banks with better reward offers, causing potential market share losses for banks that have raised their costs, like Synchrony. This could lead investors to reevaluate long positions in such names.