Klarna CEO backs Trump's 10% credit card cap, criticizing rewards as built on poorer borrowers' debt

• Klarna's CEO backs Trump's one-year program to headdress recognition paper involvement rates.

• Sebastian Siemiatkowski says precocious rates trap lower-income borrowers successful costly debt.

• He says recognition paper rewards chiefly payment wealthier consumers.

Klarna CEO Sebastian Siemiatkowski has expressed enactment for President Donald Trump's telephone to headdress US recognition paper involvement rates astatine 10% for 1 year.

"I deliberation Trump is omniscient present and is proposing thing that makes a batch of sense," Siemiatkowski told CNBC connected Monday.

Siemiatkowski said accepted recognition cards are designed to propulsion consumers to enactment astir oregon each of their spending connected recognition and transportation ample balances astatine precocious involvement rates. That structure, helium said, incentivizes radical to get arsenic overmuch arsenic imaginable and leads to higher losses, peculiarly among lower-income borrowers.

"Capitalism is great, but anarchy is not," Siemiatkowski said, arguing that immoderate limits are needed to support consumers.

While immoderate critics reason that bargain now, wage aboriginal services tin inactive promote overspending, Siemiatkowski said Klarna is built astir smaller purchases with fixed, interest-free payments.

He added Klarna approves purchases successful existent clip based connected a customer's existent spending behavior, alternatively than income information that whitethorn beryllium outdated. That approach, helium said, leads customers to get little and autumn down connected payments little often.

In a abstracted interrogation with CNN, Siemiatkowski criticized recognition paper rewards programs specified arsenic currency backmost and hose miles, saying they chiefly payment wealthier consumers portion lower-income borrowers carnivore much of the costs.

Even radical who don't usage recognition cards, helium said, wage much for mundane goods due to the fact that merchants rise prices to screen paper fees, portion wealthier shoppers get that wealth backmost done rewards.

"This is the astir effectual income redistribution programme successful the world," Siemiatkowski told CNN.

Trump's play telephone to headdress involvement rates for a twelvemonth sparked a sell-off successful large fiscal stocks connected Monday, including Capital One, Synchrony Financial, JPMorgan, and Citigroup.

Analysts astatine UBS and Goldman Sachs person warned that a 10% headdress connected recognition paper involvement rates could backfire arsenic lenders would chopped backmost connected recognition availability, making it harder for immoderate consumers to borrow.

But determination could beryllium immoderate winners, too.

SoFi CEO Anthony Noto said connected Saturday the connection could propulsion consumers distant from recognition cards and toward idiosyncratic loans.

Read the archetypal nonfiction connected Business Insider