10% APR Credit Cards: Implications for Bank of America and Citigroup Consumer Banking Profitability

Based on comprehensive research and analysis, I provide the following detailed assessment of the implications for Bank of America and Citigroup.

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On January 22, 2026, Bloomberg reported that

and are exploring options to launch new credit card products with approximately in response to the Trump administration’s proposal for a one-year interest rate cap on credit cards [1]. This strategic pivot represents a significant departure from current industry practices, where average credit card rates hover near [2], and carries profound implications for both banks’ profitability and market positioning.

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President Donald Trump announced on January 21, 2026, his intention to seek Congressional approval for a

on credit cards [1]. This proposal has triggered immediate pushback from major financial institutions, with executives warning of severe economic consequences.

Both banks have publicly opposed the cap:

• Citigroup CFO Mark Manson
  stated: “An interest rate cap is not something that we would or could support,” adding it would “restrict access to credit to those who need it the most, and frankly, have a deleterious impact on the economy” [3].

• Bank of America CEO Brian Moynihan
  emphasized: “If you bring the caps down, you’re going to get strict credit, meaning less people will get credit cards and the balance available to those credit cards will also be restricted” [3].

Wells Fargo analysts estimate that a

would:

• Reduce large bank earnings before tax by
  5% to 18%
• “Wipe out earnings”
  for lenders exclusively focused on credit cards and related services, such as Capital One (COF) and Synchrony Financial (SYF) [4].

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has substantial consumer banking exposure, with its Consumer Banking Segment generating in Q2 FY2025, representing [5]. The bank added throughout 2025 across consumer, small business, and global wealth management groups [4].

segment generated in Q3 FY2025, comprising approximately [5]. The bank’s Branded Cards credit card spend volume reached annually, with average loans of [6].

Metric	Bank of America	Citigroup
Card Spend Growth YoY	+6%	+4%
30-Day Delinquency Rate	2.46%	1.09%
90-Day Delinquency Rate	1.27%	1.15%
Credit Card NCL Rate	~3.4%	3.37%

Sources: [3], [6]

Both banks demonstrated healthy credit quality in Q4 2025, with improving delinquency trends, suggesting their existing credit card portfolios are well-underwritten.

Credit cards represent one of the highest-margin lending products for banks. The transition to 10% APR would compress the

differential that banks currently enjoy. JPMorgan Chase has specifically noted that “higher-yielding revolving card balances are expected to help cushion NII as benchmark rates drift lower” [7]—a benefit that would be significantly diminished under a 10% cap.

For perspective:

• Current average credit card APR
  : ~24% [2]
• Proposed cap
  : 10%
• Effective rate reduction
  : ~58%

Bank of America expects 2026 net interest income (NII) to rise

year-over-year, following 7.2% growth in 2025 [7]. A 10% APR mandate would fundamentally alter this trajectory.

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The consideration of 10% APR products represents a

by both banks, but with different competitive implications:

appears better positioned due to:

• Larger scale in consumer banking ($10.81B vs $5.33B revenue)
• More diversified income streams
• Stronger ROE (10.19% vs 6.71%) [5]
• Better deposit franchise and lower-cost funding

faces greater challenges because:

• Lower ROE indicates less efficient capital utilization
• Smaller consumer banking footprint
• Higher reliance on Branded Cards for U.S. Personal Banking growth
• Recent 90+ day delinquency rates showing slight deterioration (up 3 bps YoY) [6]

The 10% APR environment would fundamentally reshape competition:

** Winners Potential:**

• Banks with lower cost-of-funds that can absorb margin compression
• Credit unions and regional banks with lower operational overhead
• Fintechs with superior customer acquisition costs

• Capital One (COF)
  : Exclusively focused on credit cards—“wipe out earnings” scenario [4]
• Synchrony Financial (SYF)
  : Private-label card specialist
• Citigroup
  : Given its reliance on card-based Personal Banking revenues

The introduction of 10% APR products would require fundamental underwriting changes:

1. Tighter Credit Standards
   : Banks would need to reduce risk appetite, limiting access to marginal borrowers
2. Fee Income Reliance
   : Greater emphasis on interchange fees, annual fees, and penalty charges
3. Balance Transfer Strategies
   : Aggressive acquisition of existing balances from higher-rate competitors
4. Cross-Sell Intensification
   : Monetization through deposit relationships, investment products, and insurance

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• Revenue compression of 50-60% on credit card interest income
• Partial offset through higher-volume, lower-margin lending
• Potential credit quality improvement due to lower debt service burdens

• 15-18% EPS impact for major card issuers
• Significant reduction in new account originations
• Increased regulatory scrutiny on credit access restrictions

Period	Bank of America	Citigroup
1 Month	-5.50%	-1.59%
3 Months	+3.34%	+20.67%
6 Months	+10.54%	+23.63%
1 Year	+15.32%	+42.26%
YTD	-5.62%	-2.10%

Source: [5]

Citigroup’s stronger recent performance reflects turnaround momentum, but also indicates higher sensitivity to consumer credit disruption given its lower profitability base.

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The 10% APR scenario would force fundamental reconsideration of consumer banking economics:

High-margin revolving credit subsidizes customer acquisition and cross-selling

• Lower interest margins offset by higher volumes
• Greater emphasis on technology efficiency
• Monetization through ecosystems (payments, commerce, financial wellness)
• Potential retreat from prime/次 prime segments

Both banks’ consideration of 10% APR products may serve multiple purposes:

• Compliance Signal
  : Demonstrating willingness to adapt to regulatory expectations
• Market Positioning
  : Capturing the “affordability” narrative
• Political Strategy
  : Reducing pressure for more punitive measures
• Customer Retention
  : Maintaining relationship continuity during transition

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• Lower probability
  : Reduced rates decrease borrower default probability
• Higher severity
  : Risk-based pricing limitations reduce loss absorption capacity

• System modifications for rate cap compliance
• Customer communication and expectation management
• Legal documentation updates

• Potential market share losses to unregulated competitors
• Attrition of higher-value customers to competitors with superior risk appetite
• Talent retention challenges in card-focused businesses

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Relatively stronger due to scale, diversification, and deposit franchise

Material but manageable; 5-10% consumer banking earnings compression likely

• Leverage 10% APR products as customer acquisition tools
• Cross-sell deposit and investment products to offset margin compression
• Maintain tight credit discipline to preserve risk-adjusted returns
• Consider selective exit from marginal credit segments

More vulnerable given smaller consumer banking footprint and lower ROE

Potentially severe; credit card earnings represent larger proportion of Personal Banking profits

• Accelerate diversification beyond U.S. Personal Banking
• Explore strategic partnerships or divestitures in card business
• Aggressive cost reduction to preserve profitability
• Leverage global franchise to offset U.S. margin pressure

The 10% APR credit card scenario represents a

to the consumer banking model that has prevailed for decades. Banks that successfully navigate this transition will likely be those with:

• Low cost-of-funds advantages
• Superior operational efficiency
• Strong deposit franchises
• Diversified non-interest income streams

The ultimate outcome depends on Congressional action, regulatory implementation, and industry adaptation—but the mere consideration of these products signals a potentially transformative period for U.S. consumer credit.

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[1] Yahoo Finance - “Bank of America, Citigroup consider new credit cards with 10% rate” (https://finance.yahoo.com/news/bank-america-citigroup-consider-credit-172239108.html)

[2] Investopedia - “Average Credit Card Interest Rate for August 2025” (https://www.investopedia.com/average-credit-card-interest-rate-5076674)

[3] eMarketer - “Wells Fargo, Citi, and Bank of America issue solid earnings—and strong warnings to Trump’s interest cap” (https://www.emarketer.com/content/wells-fargo--citi--bank-of-america-issue-earnings-warnings-trump-interest-cap)

[4] Yahoo Finance - “Big banks push back on Trump’s credit card cap, warning of significant economic slowdown” (https://finance.yahoo.com/news/big-banks-push-back-on-trumps-credit-card-cap-warning-of-significant-economic-slowdown-165046195.html)

[5] Company Overview Data - Bank of America and Citigroup (金灵API)

[6] Citigroup Q4 2025 Earnings Results Presentation (https://www.citigroup.com/rcs/citigpa/storage/public/Earnings/Q42025/2025psqtr4rslt.pdf)

[7] Yahoo Finance - “Will JPMorgan Be Able to Reach Its NII Target of $103B in 2026?” (https://finance.yahoo.com/news/jpmorgan-able-reach-nii-target-145500776.html)

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Figure 1: Comparative analysis of profitability metrics, credit card performance, stock returns, and consumer banking revenue between Bank of America and Citigroup.

Figure 2: Industry average APR compared to proposed 10% regulatory cap, illustrating the magnitude of potential rate compression.