America's biggest banks line up to bash Trump over his plot to cut credit card bills as they outline obvious problem
America’s biggest banks are turning on President Donald Trump over his plan to cap credit-card interest rates, warning the move could choke off credit for millions of Americans.
After JPMorgan Chase fired the opening salvo on Tuesday, rivals including Citigroup and Wells Fargo have joined the pushback, arguing a 10 percent cap would stop them offering cards widely.
Trump has said he wants to impose a one-year limit on credit-card interest rates as part of a broader affordability drive, accusing lenders of ‘ripping off’ Americans with rates of 20 to 30 percent.
But banks say the policy would backfire. Jeremy Barnum, the chief financial officer of JPMorgan, warned lenders would simply cut access to credit for less well-off Americans rather than make it cheaper.
‘Instead of lowering the price of credit, we’ll reduce the supply of credit — and that will be bad for everyone,’ Barnum said.
Wells Fargo echoed that view on Wednesday. CFO Mike Santomassimo said: 'There would be significant negative impact of credit availability for a wide spectrum of people.'
He also warned about the broader impact on the US economy, saying a cap 'would have a negative impact on economic growth.'
Banks warn a proposed cap on credit-card interest rates could reduce access to borrowing
Mark Mason, CEO of Citi Private Bank, pictured in New York, as major banks warn a proposed cap on credit-card interest rates could hurt lending
JPMorgan Chase executive Jeremy Barnum warned that capping credit-card interest rates would shrink credit availability for consumers
Citigroup's CFO Mark Mason, on the same day, said a cap would restrict credit ‘to those who need it most’ and could trigger a broader economic slowdown.
This would have 'unintended consequences on the consumer' and likely result in a 'significant slowdown on the economy', he added.
He also warned about the wider impact on the US economy, saying a cap 'would have a negative impact on economic growth.'
This is because a sharp reduction in access to credit could hit consumer spending — a major driver of the US economy.
The backlash comes as credit cards dominate everyday spending. They account for roughly 70 percent of US retail payments, while the average APR sits near 19.6 percent, according to Bankrate — nearly double the level Trump wants.
Banks argue that capping rates would fundamentally change how credit cards work.
Cards are profitable largely because high interest on unpaid balances helps offset fraud, defaults and rewards programs.
If lenders are unable to charge enough interest to cover those risks, they may cut or stop issuing credit cards or not offer them to entire sets of borrowers, such as poorer people.
American Express unveiled its revamped Platinum Card in the fall. The annual fee has jumped from $695 to $895, but Amex says the extra perks — which appeared in customers' apps Friday morning — more than make up for the $200 bump
That could mean fewer approvals, lower credit limits, or banks pulling back from issuing cards altogether, particularly to higher-risk customers.
Many Americans rely on credit cards to buy things they might not have cash for immediately, and then pay off when the paycheck arrives.
The industry is already locked in an aggressive credit-card arms race.
In June, Chase refreshed its Sapphire Reserve card, adding new travel perks and raising its annual fee. In September, American Express followed with a Platinum overhaul, piling on credits — including $400 at restaurants, $600 at hotels and $300 at Lululemon — and hiking fees to $895.
Those perks are funded in part by interest income — something banks warn would be squeezed hard under a cap.
Notably, one newcomer is taking the opposite approach. On Wednesday, Bilt — which made its name offering cards for rent payments with no fees — launched three new cards with interest rates capped at 10 percent for its first year.
Trump’s proposal would go much further, applying across the market. While a similar 10 percent cap has been floated before by lawmakers including Bernie Sanders, no such limit currently exists in US law, and major banks are already signalling they would fight it.
