After President Donald Trump asked Congress to pass legislation to cap credit card interest rates at 10% for a year, two large U.S. banks are considering new products that may address the administration’s concerns about affordability, according to a media report on Thursday.
Separately, Bank of America (BAC) and Citigroup (C) are exploring cards with a 10% rate as a solution, Bloomberg News reported, citing people familiar with the matter.
Many issuers, including BofA (BAC) and Citi (C), already offer introductory rates as low as 0% for a period of time, the report noted.
Soon after Trump floated the idea of a 10% rate cap, several bank CEOs pushed back, saying the limit would severely impair consumers’ access to credit, which, in turn, would reduce consumer spending.
JPMorgan Chase (JPM) chief Jamie Dimon said, “Specifically, people will lose access to credit, like on a very, very extensive and broad basis, especially the people who need it the most.”
However, some bank executives have publicly agreed with Trump’s focus on affordability. For example, Citi (C) CEO Jane Fraser said the president is right to focus on affordability, but a credit card interest rate cap would not help. “You would not be able to provide credit and access to credit for people who need it the most,” she said in a CNBC interview on Tuesday.
Bank of America (BAC) has been discussing the issue with the administration, CEO Brian Moynihan said in a Bloomberg Television interview on Thursday. “We’re all for affordability in financial products,” he said. The bank already offers a no-frills credit card with a lower rate, but it’s not as low as 10%, he said.
The issue is, “To get credit losses down to the point where you can afford that rate, you can never have a charge-off,” Moynihan said in the Bloomberg interview.
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