Bank of America and Citigroup are reportedly considering offering credit cards with a 10% interest rate in an effort to appease President Trump, who recently demanded a cap at that level for one year.
The two banks are separately weighing credit card options at a 10% rate, people familiar with the matter told Bloomberg.
Shares in Bank of America and Citigroup on Thursday jumped 1.2% and 1.8%, respectively.
Bank of America declined to comment. Citigroup did not immediately respond to noti.group’s request for comment.
Earlier this month, Trump ordered credit card issuers to cap rates at 10% for one year, arguing it would benefit consumers who have been “ripped off” by companies that charge 20% to 30%.
He said this week that he plans to ask Congress to approve the proposal.
Proponents of the cap on credit card interest rates – which Trump first floated on the campaign trail – have argued the policy would provide substantial relief to consumers bogged down by inflation.
But banking groups have been quick to warn that government-imposed limits would limit card approvals to consumers with high incomes and excellent credit scores, and force lenders to dismantle popular rewards programs that are funded by interest income and fees.
“We’re working hard,” Bank of America CEO Brian Moynihan said during a Bloomberg TV interview Thursday, nodding to calls for affordability. “We’re trying to come up with solutions.”
Moynihan said a 10% cap would hammer consumer spending, though he added that the bank has been talking to the Trump administration about the proposal.
Top financial executives at Citigroup and Wells Fargo sounded alarm bells over the potential effects of a 10% cap, while JPMorgan’s Jamie Dimon warned it could force banks to yank credit lines for most Americans.
“Of course we want affordability,” Dimon said Wednesday during the World Economic Forum in Davos, Switzerland. But the 10% cap “would be [an] economic disaster.”
Trump on Thursday sued JPMorgan Chase and Dimon for $5 billion over allegations of politically-motivated “debanking.”
Bank of America and Citigroup wouldn’t be the first companies to heed Trump’s call to cap rates.
New York-based startup Bilt – known for offering rewards on rent payments – last week unveiled new credit cards with a 10% APR for the next 12 months.
Many credit card issuers – including Bank of America and Citi – offer some introductory rates as low as 0% for new sign-ups.
The 10% credit card cap is just Trump’s latest effort to tackle the US’ affordability crisis.
He has ordered a $200 billion mortgage bond-buying spree and signed an executive order earlier this week banning institutional investors from gobbling up single-family homes in the US.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
