The Consumer Financial Protection Bureau (CFPB) released a blog post discussing its research into factors considered significant in explaining current credit card interest rates.
With Increasing prices for necessities including groceries and gas, the use of credit cards has increased and it likely to continue to increase. More than 175 million Americans have at least one credit card and half of these credit cards carry a balance that continues to accrue interest. The CFPB highlights three main factors that have affected current credit card interest rates:
- Record low charge-off rates (the measure of accounts deemed uncollectable after sustained delinquency)
- A stagnant percentage of subprime cardholders
- Historically low prime rates
The CFPB plans to increase its scrutiny of the credit card industry and plans to evaluate whether trends explain the credit card industry’s high interest rates or if anti-competitive practices, such as those that prevent consumers from receiving better offers, have driven issuers profits at the cardholder’s expense. It is important to note that the CFPB has no power to act on credit card interest rates, but it has announced review of the maximum permitted late charge under the CARD Act.
To see the CFPB’s full blog post and analysis of the above factors, please visit this link.