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CFPB Report Finds Big Banks Charge Higher Credit Card Interest Rates Than Small Banks and Credit Unions
WASHINGTON DC – The Consumer Financial Protection Bureau (CFPB) today reported in the first set of results from the newly updated Credit Card Plan Terms search. The survey data reveals that large banks offer worse conditions and interest rates for credit cards than small banks and credit unions, regardless of credit risk. In fact, the top 25 credit card issuers charged customers interest rates 8 to 10 points higher than small and medium-sized banks and credit unions. This difference can translate into $400 to $500 in additional annual interest for the average cardholder.
“Our analysis found that the largest credit card companies are charging substantially higher interest rates than smaller banks and credit unions,” said CFPB Director Rohit Chopra. “With more than $1 billion in outstanding credit card debt, the CFPB will accelerate its efforts to ensure consumers can access better rates that can save families billions of dollars a year.”
Today’s survey data includes information on all general-purpose credit cards from the 25 largest credit card issuers in the United States. The data also includes a representative sample of products from small and medium-sized banks and credit unions across the country. Among some of the main conclusions of the research:
- Big issuers offered worse rates across all credit scores: Whether a person has bad, good, or excellent credit, large issuers offer higher interest rates. For example, the median interest rate for people with good credit – a credit score between 620 and 719 – was 28.20% for large issuers and 18.15% for small issuers.
- Fifteen issuers reported credit cards with interest rates above 30%: Nine of the nation’s largest credit card issuers reported at least one product with a maximum annual percentage rate (APR) exceeding 30%. Many of these high-cost products were private-label or co-branded cards offered through retail partnerships.
- Larger issuers were more likely to charge annual fees: Among credit cards from large issuers, 27% charged an annual fee, compared to just 9.5% for small businesses. The average annual fee was $157 for the largest issuers, as opposed to $94 for the smallest issuers.
The newly updated Credit Card Product Terms survey is one part of the CFPB’s efforts to increase competition across the credit card market. The CFPB is driving change through open bankexamining bait and switch tactics in credit card rewardsclosing loopholes that allow credit card issuers to charge unwanted fees and promote credit card shopping comparison.
In October 2023, the CFPB published 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 surpassed $1 billion 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 expected in late spring 2024. The CFPB is developing a consumer-facing tool that, once completed, will give People looking for a new credit card an unbiased way to compare credit card terms and interest rates.
Read the CFPB’s data on the agency’s Credit Card Plan Terms survey.
Read more about the Credit Card Plan Terms search.
Consumers can lodge complaints about financial products or services by visiting the CFPB website or calling (855) 411-CFPB (2372).
Employees who believe their company has violated federal consumer financial protection laws are encouraged to submit information about what they know 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 markets for consumer financial products are fair, transparent and competitive. For more information visit www.consumerfinance.gov.