Some of America’s top bankers are warning that the president’s cap on credit card interest rates would prove disastrous for lower-income consumers and the US economy — not to mention their profits.
Faced with President Trump’s proposal to slash their credit card interest rate fee income days before reporting fourth quarter earnings, senior executives for the nation’s four largest banks — JPMorgan Chase (JPM), Citigroup (C), Bank of America (BAC), and Wells Fargo (WFC) — all said they agree that affordability is an issue, but that limiting credit card interest rates isn’t the right approach to solve it.
“An interest rate cap is not something that we would or could support, frankly,” Citigroup’s outgoing CFO Mark Mason said Wednesday during a call with reporters.
Such a move would “likely result in a significant slowdown in the economy,” Mason said, adding that “affordability is clearly an important issue and one that we look forward to collaborating with the administration on.”
“We’re all in for affordability,” Bank of America CEO Brian Moynihan told analysts on Wednesday while presenting the argument why limiting credit card interest rates would have adverse effects.
“If you bring the caps down, you’re going to get restricted credit, meaning less people will get credit cards, and the balance available to them on those credit cards will also be restricted. And so you have to balance that against what you’re trying to achieve on affordability,” Moynihan said.
Shares of Wells Fargo, Bank of America, Citigroup, and JPMorgan Chase have fallen between 5% and 8% over the past week.
Citigroup, Wells Fargo, and Bank of America reported fourth quarter earnings on Wednesday, while JPMorgan reported on Tuesday. Net income rose at Wells Fargo and Bank of America but declined at JPMorgan and Citigroup when compared to the fourth quarter of 2024.
In a post on Truth Social last Friday, President Trump called for a “one year cap on Credit Card Interest Rates of 10%.” The president has since doubled down on the proposal, saying banks that didn’t comply by Jan. 20 would be in violation. It’s not clear how Trump plans to cap card fees without an executive order, voluntary action, or Congress first passing legislation, analysts have said.
The potential cap’s impact “would be dramatic on subprime” customers, JPMorgan CEO Jamie Dimon said Tuesday.
“We all agree” on the issue of affordability, Wells Fargo CEO Charles Scharf told analysts Wednesday during the bank’s earnings call. “We’re very much aligned with trying to find solutions to help as many as we can.”
