Delta's CEO speaks out against Trump's push to cap credit card interest rates
President Donald Trump wants to cap credit card interest rates at 10% for a year. Executives are railing against the idea
Smith Collection/Gado/Getty Images
Delta Air Lines’ boss has become the latest high-profile corporate chief to push back against President Donald Trump’s plans to cap credit card interest rates at 10%, claiming it would hurt customers.
“The knock-on effects are pretty significant when you think about what seems to be a good idea to help lower income strata and bring some interest-rate relief,” CEO Ed Bastian said in a Bloomberg interview. “The reality is, it will eliminate their ability for credit and freeze up tremendous amounts of credit lines that the banks will not be able to afford.”
Related Content
Over the weekend, Trump warned that credit card issuers would be “breaking the law” if they failed to cap interest rates at 10% for one year, despite the absence of legislation or executive authority to impose such a limit.
It has prompted outcry from the banking industry. “If it were to happen, it would be very bad for consumers, very bad for the economy,” JPMorgan $JPM's CFO Jeremy Barnum said Tuesday, adding that the bank’s card operation “would be a business that we would have to significantly change” if it came into place.
Even after the Federal Reserve cut interest rates late last year, retail credit card rates have barely come down. The average interest rate on store-branded cards is still above 30%, according to Bankrate, meaning many shoppers continue to pay extremely high borrowing costs if they carry a balance.
Airline loyalty programs are vital revenue-makers for carriers, and many include jointly branded credit cards with banks. Delta works with American Express $AXP, “so that’s not an income level that we’re focused on in our business,” Bastian said.
The interview came after the airline reported earnings, saying high-end demand continues to outpace sales in standard coach cabins, a trend that has accelerated as wealthier travelers keep flying while more price-sensitive customers pull back.
The split is influencing how Delta plans its capacity, it said, with the airline directing virtually all of its seat growth toward premium cabins, as it tries to set itself apart from budget carriers and focus on the more expensive end of the market.