New CFPB Research Sheds Light on Big Banks’ Credit Card Greedflation Practices

New CFPB Research Sheds Light on Big Banks’ Credit Card Greedflation Practices

Big banks are charging higher interest rates on credit cards than small banks, potentially costing customers hundreds of dollars a year

The Consumer Financial Protection Bureau released new research today that shows large banks charge customers higher interest rates on their credit cards than smaller institutions, even with no difference in credit risk – rates that are even higher than those raised by the Federal Reserve. Groundwork Collaborative Executive Director Lindsay Owens reacted with the following statement:

“This new insight into the predatory practices deployed by big banks confirms what many customers already know: Big corporations will use any tactic they can to make an extra buck.

“Thankfully, CFPB has already stepped up to take on the credit card industry by clamping down on misleading rewards programs and working to ban the junk fees that only serve to disproportionately harm low-income people.”

Email press@groundworkcollaborative.org to speak with one of Groundwork’s experts about greedflation and what it means for our economy.

Background

• The report surveyed the 25 largest credit card issuers and sampled credit cards on offer from small and medium-sized banks and credit unions.
• Large issuers offered worse interest rates across all credit scores. The median rate for people with good credit (credit score between 620 and 719) was 28.20% for the 25 biggest issuers and 18.15% for small issuers.
• With credit cards from large issuers, 27% charged an annual fee, compared to 9.5% of small issuers. The average fee was $157 for the largest issuers, as opposed to $94 for smaller issuers.
• Credit card issuers are charging interest rates higher than 30%, with nine of the largest issuers offering at least one credit card with an APR north of 30%. These high-cost cards were private label or cards offered through partnerships with retailers.