Bank of America ( BAC.N ) is exploring the possibility of introducing new credit cards with 10% interest rates, according to sources familiar with the matter. The consideration comes in response to President Donald Trump’s call for a cap on credit card interest rates. Similarly, Citigroup ( CN ) is reportedly evaluating new card offerings with a 10% rate as a possible solution to deal with the proposed cap. Citigroup has declined to comment on the matter. Bank of America is a multinational investment bank and financial services holding company headquartered in Charlotte, North Carolina. Citigroup is a multinational investment bank and financial services corporation headquartered in New York City.
Trump initially proposed a 10% interest rate cap earlier this month and on Wednesday reiterated his intention to seek congressional approval for a one-year implementation. The proposal has faced opposition from banking industry bodies, with executives warning that a broader cap could reduce lending and hamper economic growth. However, some experts say credit cards generate substantial returns and offer room for rate cuts.
Analysts suggest that implementing such a measure would require legislation, which faces uncertain prospects in Congress. It has also been suggested that the industry could advocate a compromise, introducing a basic, no-frills card at 10% with limited benefits. An initial deadline of January 20 was set for US banks to implement the cap, which was previously proposed by Trump, although the White House did not release details on its implementation.
Bank of America CEO Brian Moynahan has expressed concerns that the proposal would limit access to credit, while Citigroup CEO Jane Fraser has warned of potential strains on spending and the broader economy. Credit cards remain a major source of profit for banks, which charge high rates on these unsecured loans to compensate for default risk.
Post Comments: 1
