On February 16, 2024, the Consumer Financial Protection Bureau (CFPB) reported on the first set of results from the newly updated Terms of Credit Card Plans survey which revealed that large banks are offering worse credit card terms and interest rates than credit unions and small banks, regardless of credit risk. The survey found that the average cardholder could save $400 to $500 in annual interest at a credit union or small bank since the 25 largest credit card issuers charge customers interest rates that are 8 to 10 points higher.
Key Findings from the Terms of Credit Card Plans Survey:
- Large issuers offered worse rates across credit scores: Large issuers offer higher interest rates, regardless of whether a person has poor, good, or great credit. 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 largest credit card issuers in the country 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-branded cards offered through retail partnerships.
- Large issuers were more likely to charge annual fees: Among large issuers’ credit cards, 27% carried an annual fee, compared to just 9.5% of small firms. The average annual fee was $157 for the largest issuers, as opposed to $94 for smaller issuers.
Want to learn more about the Terms of Credit Card Plans Survey as reported by the CFPB? Read more here.
