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 plan to cap credit card interest rates.
• Sebastian Siemiatkowski says high rates trap lower-income borrowers in costly debt.
• He says credit card rewards mainly benefit wealthier consumers.

Klarna CEO Sebastian Siemiatkowski has expressed support for President Donald Trump's call to cap US credit card interest rates at 10% for one year.

"I think Trump is wise here and is proposing something that makes a lot of sense," Siemiatkowski told CNBC on Monday.

Siemiatkowski said traditional credit cards are designed to push consumers to put most or all of their spending on credit and carry large balances at high interest rates. That structure, he said, incentivizes people to borrow as much as possible and leads to higher losses, particularly among lower-income borrowers.

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

While some critics argue that buy now, pay later services can still encourage overspending, Siemiatkowski said Klarna is built around smaller purchases with fixed, interest-free payments.

He added Klarna approves purchases in real time based on a customer's current spending behavior, rather than income data that may be outdated. That approach, he said, leads customers to borrow less and fall behind on payments less often.

In a separate interview with CNN, Siemiatkowski criticized credit card rewards programs such as cash back and airline miles, saying they mainly benefit wealthier consumers while lower-income borrowers bear more of the costs.

Even people who don't use credit cards, he said, pay more for everyday goods because merchants raise prices to cover card fees, while wealthier shoppers get that money back through rewards.

"This is the most effective income redistribution program in the world," Siemiatkowski told CNN.

Trump's weekend call to cap interest rates for a year sparked a sell-off in major financial stocks on Monday, including Capital One, Synchrony Financial, JPMorgan, and Citigroup.

Analysts at UBS and Goldman Sachs have warned that a 10% cap on credit card interest rates could backfire as lenders would cut back on credit availability, making it harder for some consumers to borrow.

But there could be some winners, too.

SoFi CEO Anthony Noto said on Saturday the proposal could push consumers away from credit cards and toward personal loans.