What Happens When You Cap Credit Card Rates?

Jamie Dimon, the CEO of JPMorgan Chase, recently shared his thoughts on President Trump's proposal to cap credit card interest rates at 10%. He suggested testing this idea in Vermont and Massachusetts. He brought this up at the World Economic Forum in Davos, Switzerland.

Dimon's Concerns

Dimon believes that a nationwide rate cap would be a bad idea. He thinks it could lead to a big drop in credit card services for most Americans. He also mentioned that banks have been pushing back against Trump's order to lower rates. They argue that price controls could force them to close many customer accounts.

A Proposed Solution

Dimon had a suggestion to settle the debate. He proposed that the government should test the rate cap in just two states. These states are the home of Senators Bernie Sanders and Elizabeth Warren, who support such a cap. Dimon thinks this test would show the real effects of a rate cap.

Potential Impact

He warned that the biggest impact wouldn't be on credit card companies. Instead, it would hit businesses like restaurants, retailers, and even schools. This is because people might struggle to pay their bills if credit becomes harder to get.

JPMorgan Chase's Next Steps

Dimon also said that JPMorgan Chase plans to share its analysis with the Trump administration. He believes that the government should not get too involved in setting prices. But he also knows that he has to deal with the current situation.