WASHINGTON, DC – The Consumer Financial Protection Bureau (CFPB) today released the initial findings of its newly updated study on credit card plan terms. Survey data shows that large banks offer worse credit card terms and interest rates than smaller banks and credit unions, regardless of credit risk. In fact, the largest 25 credit card issuers charge customers interest rates 8 to 10 percentage points higher than small and mid-sized banks and credit unions. This difference equates to an additional $400 to $500 per year in interest for the average cardholder.
“Our analysis finds that large credit card companies charge significantly higher interest rates than smaller banks and credit unions,” said CFPB Director Rohit Chopra. “With more than $1 trillion in outstanding credit card debt, the CFPB is accelerating our efforts to help consumers access better interest rates, saving households billions of dollars annually.”
Today's survey data includes information on all general-purpose credit cards from the 25 largest U.S. credit card issuers. The data also includes a representative sample of offerings from small and mid-sized banks and credit unions across the country. Key findings from the survey include:
Large card issuers offered lower interest rates regardless of credit score: Large card issuers offered higher interest rates whether an individual had bad, good, or excellent credit. For example, the median interest rate for people with good credit (credit score 620-719) was 28.20% at large card issuers and 18.15% at small card issuers. 15 card issuers reported credit cards with interest rates over 30%: Nine of the nation's largest credit card issuers reported at least one product with a maximum purchase annual percentage rate (APR) over 30%. Many of these high-cost products were private label or co-brand cards offered through retail partnerships. Large card issuers were more likely to charge annual fees: 27% of credit cards from large card issuers charged annual fees, compared to just 9.5% from small issuers. The average annual fee was $157 for major card issuers and $94 for smaller card issuers.
The investigation into newly updated credit card product terms is part of the CFPB’s efforts to promote competition across the credit card marketplace. The CFPB is working to encourage switching through open banking, scrutinize bait-and-switch credit card rewards schemes, close loopholes that allow credit card issuers to collect unfair fees, and promote comparison shopping for credit cards.
In October 2023, the CFPB released its semi-annual consumer credit card market report. The report noted that more than 190 million consumers have at least one credit card. The report also stated that both credit card debt and spending reached record levels at the end of 2022. Debt exceeded $1 trillion and spending reached $846 billion.
The CFPB will continue to release data on credit card pricing and availability every six months, with the next release scheduled for late spring 2024. The CFPB is developing consumer tools that, when complete, will help people looking for a new credit card make fair comparisons of credit card terms and interest rates.
Check out some interesting data from the CFPB's “Credit Card Plan Terms” study.
Learn more about our research into credit card plan terms and conditions.
Consumers can file complaints about financial products or services by visiting the CFPB's website or calling (855) 411-CFPB (2372).
Employees who believe their company is violating federal consumer financial protection laws are encouraged to submit any information they have to whistleblower@cfpb.gov.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer financial laws and ensures that the market for consumer financial products is fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.