BofA considers new credit cards with 10% interest rate, source says

By Manya Saini and Utkarsh Shetti

Jan 22 (Reuters) - Bank of America BAC.N is considering options to offer new credit cards with an interest rate of 10% to satisfy President Donald Trump's demands, a source familiar with the matter said on Thursday.

Citigroup C.N is also weighing new cards with a 10% rate as a potential solution to a broad cap, according to Bloomberg News, which first reported the news.

Citigroup declined to comment.

BofA's shares were nearly 1.1% higher in afternoon trading, while Citi was up nearly 2%.

Trump, who first called for a 10% interest rate cap earlier this month, said on Wednesday he would ask Congress to approve the move for one year.

The proposal has drawn backlash from banking industry bodies, with executives also warning the wide-ranging cap would prompt a pullback on lending and curb economic growth. However, some experts argue that credit cards are highly profitable and have room for lower rates.

Analysts have said such a move would require legislation, with passage in Congress unlikely. Some also noted that the industry could push for a compromise where lenders launch no-frills cards at the 10% rates with fewer benefits.

U.S. banks had faced a January 20 deadline to implement the cap first proposed by Trump in a Truth Social post, but the White House had not provided details on how such a cap would be enforced.

Bank of America CEO Brian Moynihan has said the proposal would restrict access to credit, while Citigroup's top boss Jane Fraser has stated it would have an impact on spending and the economy.

Credit cards are a strong profit engine for banks, which charge high rates on those unsecured loans to make up for the higher risk of default.