The Trump administration is floating a new proposal aimed at expanding access to credit cards after the president’s calls for a 10% cap on credit card interest rates were met with pushback from the financial services industry.
President Donald Trump called for a 10% cap on credit card interest rates in a post on his Truth Social platform last week, and said it would take effect on Jan. 20 – the first anniversary of his second inauguration as president.
However, the proposal would likely require action by Congress and was met with pushback from the financial services industry, which warned that millions of credit card users would lose access to credit if a 10% cap were implemented.
National Economic Council Director Kevin Hassett appeared on FOX Business Network’s “Mornings with Maria” and told Maria Bartiromo that the administration’s discussions with large financial institutions have included discussion of a “Trump card” that would seek to expand access to credit for consumers.
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“We’ve been in conversations with the big banks, with CEOs of many of the big banks, who think that the president’s on to something – that he’s got a great idea,” Hassett said.
He said that the big banks “could potentially voluntarily provide for people who are in that kind of sweet spot of not having financial leverage very much because they don’t have access to credit, but they have enough income and stability in their lives so that they’re worthy of credit.”
“Our expectation is that it won’t necessarily require legislation, because there will be really great new ‘Trump cards’ presented for folks that are voluntarily provided by the banks,” Hassett added.
FOX Business reached out to several financial institutions for comment about Hassett’s discussion of the new “Trump card” proposal.
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Critics of the president’s proposed 10% interest rate cap warned following last week’s announcement that if such a cap were implemented, many Americans would lose their credit cards or they would undergo significant changes.
The Electronic Payments Coalition (EPC) analyzed the impact of a 10% credit card rate cap and found that between 82% and 88% of credit card holders would see their card eliminated, or their credit limit drastically reduced, with low- to moderate-income consumers most affected.
EPC’s analysis estimated that nearly every credit card account associated with a credit score below 740 would be closed or severely restricted if a 10% interest rate cap were implemented. That would impact an estimated 175 million to 190 million credit card holders, the group found.
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JPMorgan Chase Chief Financial Officer Jeremy Barnum said on a call tied to the bank’s fourth-quarter earnings release that a 10% credit card rate cap would hurt the broader economy through reduced access to credit.
“What’s actually simply going to happen is that the provision of the service will change dramatically. Specifically, people will lose access to credit, like on a very, very extensive and broad basis, especially the people who need it,” Barnum said.
He added that this could create a “severely negative consequence for consumers and, frankly, probably also a negative consequence for the economy as a whole.”
“I think it should be obvious that that would also be bad for us. I’m not going to get into quantifying, but in a narrow sense, this is a big business for us. It’s a very competitive business, but we wouldn’t be in it if it weren’t a good business for us,” Barnum said.
FOX Business’ Daniella Genovese contributed to this report.
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