JPMorgan Chase’s chief financial officer outlined the impact of a rate cut on its credit card business on Tuesday, warning that such a move could have detrimental effects on the bank’s lending business.
“It’s a very competitive business, but we wouldn’t be in it if it weren’t a good business for us. And in a world where price controls make it no longer a good business, that would present a significant challenge,” Jeremy Barnum, the CFO, told analysts and shareholders during the company’s fourth-quarter earnings call.
“Clearly beyond that, you know, the way we actually respond would have a lot to do with the details. And I just don’t think we have enough information at this point,” Barnum added, saying a dramatic shift in lenders’ card interest rates could lead to negative consequences for consumers — “especially the people who need it the most.”
On Friday, President Donald Trump said in a Truth Social post that he would call for a 10% cap on credit card interest for one year, starting on January 20. Lawmakers from both parties have criticized card interest rates, which have sat around 20% in recent years, according to Bloomberg.
Congress would typically need to approve such a cap, which would eat into banks’ profits.
Jamie Dimon, the firm’s CEO, who was also on the call, said reducing card interest rates could adversely affect customers with lower credit scores by limiting access to credit. “If it happened the way it was described, it would be dramatic,” Dimon added.
The bank’s cards business is central to its retail-focused offerings. Debit and credit card sales volume rose 7% from a year earlier, with card services sales totaling about $360 billion for the quarter, according to its earnings presentation.
Revenue in the consumer and community banking division climbed 6% year over year to $19.4 billion, which JPMorgan said was driven in part by higher net interest income from card services as revolving balances grew.
Now, JPMorgan is in the process of taking over the Apple card from Goldman Sachs, which previously supported the tech giant’s credit card offering. The transition, JPMorgan has said, is expected to take up to two years to complete.
Representatives for Chase previously directed Business Insider to a joint statement from the Bank Policy Institute, American Bankers Association, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America, which said they support Trump’s goal of helping Americans access affordable credit, but warned of reduced credit availability.
“If enacted, this cap would only drive consumers toward less regulated, more costly alternatives,” the bank said.
The idea ignited a sell-off in major financial stocks on Monday, including JPMorgan. Trump’s move continued a series of swipes against big businesses, including banks.
