RSSLarge banks are offering consumers inferior credit card terms and interest rates compared to their small bank and credit union peers, according to a Feb. 16 Consumer Financial Protection Bureau report.
The 25 largest credit card issuers reportedly charged interest rates eight to 10 points higher than small- and medium-sized banks and credit unions — $400 to $500 in additional annual interest. The median interest rate for large issuers was 28.20 percent for customers with a credit score between 620 and 719, compared to 18.15 percent for small issuers.
Fifteen issuers had credit cards with interest rates higher than 30 percent. Nine of the largest credit card companies had at least one product with an annual percentage rate higher than 30 percent. Many of those were private label or co-branded cards offered through retail partnerships, according to the CFPB. Among the large issuers’ credit cards, 27 percent included an annual fee, compared with less than 10 percent of small firms. The average annual fee for the largest issuers was $157, compared to $94 for smaller issuers.
“With over $1 trillion in credit card debt outstanding, the CFPB will be accelerating its efforts to ensure that consumers can access better rates that can save families billions of dollars per year,” said CFPB Director Rohit Chopra.
The report included the results of the CFPB’s Terms of Credit Card Plans survey. Last October, the CFPB announced that more than 190 million consumers have at least one credit card and that both credit card debt and spending were at record levels at the end of 2022. Debt surpassed $1 trillion, while spending reached $846 billion.
