BofA, Citi Weigh 10% APR Cards After Trump Rate Cap Push

Bank of America and Citigroup are reportedly exploring options to launch new credit cards with a 10% interest rate. According to a Bloomberg News report citing sources familiar with the discussions, the move is a potential response to President Donald Trump's call for a broad cap on credit card rates.

Both banks are independently evaluating the new card offerings as a possible solution to avoid a government-mandated rate ceiling. When asked for a statement, neither Citigroup nor Bank of America provided an immediate comment.

Following the news, Bank of America's shares saw a nearly 2% increase in afternoon trading, while Citigroup's stock climbed 2.4%.

The Political Pressure for a 10% Cap

The consideration by the two major banks follows President Trump's announcement that he would ask Congress to approve a 10% interest rate cap on all credit cards for a one-year period.

U.S. banks had previously faced a Tuesday deadline to implement this cap, which Trump first proposed in a Truth Social post. However, the White House had not released any details on how such a limit would be enforced.

Industry Warns of Economic Fallout

Financial industry executives have voiced concerns that a wide-ranging cap on all credit card interest rates would force a pullback in lending and negatively impact economic growth.

Bank of America CEO Brian Moynihan has stated that the proposal would ultimately restrict consumer access to credit. Similarly, Citigroup CEO Jane Fraser warned that a rate cap would have a direct impact on consumer spending and the broader economy.

While executives warn of negative consequences, some experts argue that the credit card industry is highly profitable and has enough margin to accommodate lower interest rates.

Analyst Outlook: Legislation Unlikely

Market analysts believe that implementing such a rate cap would require new legislation, which is considered unlikely to pass in Congress.

Some observers have suggested that the industry might seek a compromise. Under this scenario, lenders could voluntarily launch no-frills credit cards at the proposed 10% rate. These cards would likely come with fewer benefits and rewards compared to standard offerings.