Calling Back to Jimmy Carter, Citigroup’s CEO Says Credit Card Rate Caps Would ‘Not Be Good’ for the U.S. Economy

Core Insights - The proposed 10% cap on credit card interest rates aims to provide relief to consumers amid high inflation and interest rates, with current APRs averaging 20%-25% and exceeding 30% for subprime borrowers [3][4] - Banks, particularly Citigroup, have a vested interest in maintaining higher interest rates on credit card debt, as it represents a significant revenue source, with U.S. consumers paying $160 billion in interest charges in 2024, up 52.3% from $105 billion in 2022 [1][5] - Citigroup's credit card segments generated $18.3 billion in revenue in 2025, accounting for approximately 24.6% of the firm's total revenue, highlighting the importance of this business line [5] Industry Impact - The banking industry is concerned that capping interest rates could restrict credit access and negatively affect purchasing power, as noted by Citigroup's CEO Jane Fraser, who referenced historical failures of similar policies [4][6] - The spread between credit card APRs and the Federal Funds Rate is approximately 18%, significantly higher than other lending forms, allowing specialized credit card banks to report a return on assets (ROA) of 3.87% in 2024, nearly triple the broader banking sector's ROA of 1.38% [4][6] Citigroup Specifics - Citigroup's Q4 2025 results showed a revenue increase of only 2% to $19.9 billion, missing consensus estimates, and an 11.2% decline in EPS to $1.19 per share, marking the first bottom-line miss in over two years [7] - Despite the disappointing quarterly results, Citigroup's average deposits and loan balances improved by 8% and 7% year-over-year, respectively, indicating growth in core banking operations [8] - Citigroup's stock has increased by 41% over the past year, with a market cap of $201.83 billion and a dividend yield of 2.03%, higher than the sector median [9][10] Analyst Sentiment - Analysts have rated Citigroup's stock as a "Moderate Buy," with a mean target price of $131.46, suggesting an upside potential of about 14% from current levels [11]