President Trump has asked credit card issuers to hold interest rates down to 10% for a year, His motives are completely political.
He wants the economy to boom long enough to get through the fall midterm elections without losing control of Congress. Let me be clear, I share his goal of a GOP-controlled Congress.
I'm not certain his chosen method will work, however. High interest rates enable credit card companies to offer credit cards to people who do not have outstanding credit ratings. Who pose a risk for default.
If firms do hold interest rates down to 10%, there is a good chance they will cancel the cards of people with a less-than-stellar credit history. Such people get driven into the hands of the payday loan sharks which are as expensive and more punitive. Not an improvement in their lives.
Lacking credit, individuals will consequently purchase less and the economy can suffer thereby. A soft economy can lead people to vote for change.
In other words, holding card balance interest rates down can be counter-productive for Trump's goal of reelecting Republican senators and representatives.
