Speaking at the World Economic Forum in Davos, Switzerland, Dimon said Wednesday (Jan. 20) that while his bank would weather the disaster, most consumers in the United States would not be as lucky, according to the report.
“It would remove credit from 80% of Americans, and that is their back-up credit,” Dimon said, per the report.
The 10% cap was proposed this month by President Donald Trump, drawing skepticism from bank executives and criticism from the industry, which said it would hinder consumers’ ability to access credit.
“People crying the most will not be the credit card companies; it will be the restaurants, retailers, travel companies, the schools, the municipalities,” Dimon said, per the report.
Analysts have said card companies could make concessions, such as lower rates for certain customers, bare bones cards that could charge 10% but offer no rewards, or reduced credit limits, according to the report.
“People will miss their water payments, this payment and that payment,” Dimon said, adding that lawmakers should test if the move will work by piloting it in Vermont and Massachusetts, per the report.
Dimon’s comments came one day after Jane Fraser, his counterpart at Citigroup, told CNBC she does not expect Congress to back the 10% cap.
“There is a very keen understanding that this would have the opposite impact of what the actual intent would be, and that there are better ways to go about it, and we’re very happy and continue to work on providing them,” Fraser said.
While Trump’s focus on affordability is on the right track, banks already have “low-cost, no-frill” products that offer consumers access to credit, she said.
PYMNTS Intelligence found that credit is important to members of the Labor Economy, which includes the 60 million workers who earn less than $25 an hour and account for about 15% of consumer spending in the U.S.
The PYMNTS Intelligence report “Wage to Wallet Index: Wage Volatility’s $14B Consumer Spending Gap” found that 33.8% of Labor Economy workers always or usually carry a revolving credit balance. For the broader population, that figure is less than 25%.
“Average outstanding card balances for these workers exceed 22% of annual income, highlighting that credit is being used to manage timing gaps between pay and expenses rather than to fund discretionary purchases,” PYMNTS reported Wednesday. “The Labor Economy’s average credit score of 677, versus 722 for non-Labor Economy consumers, also means many face higher borrowing costs.”
