Despite the reversal of the Consumer Financial Protection Bureau (CFPB) rule, large credit issuers continue to hold elevated interest rates and new fees on credit cards.
Interest Rate Levels on Credit Cards
Last year, retail credit cards reached a record average interest rate of 30.5%, and these rates have remained high even after the CFPB rule was overturned. Banks initially justified their rate increases by citing the rule as a threatening factor, yet experts noted minimal consumer pushback against these changes.
Consumer Struggles with High Rates
Americans facing financial hardships are more likely to rely on retail credit cards, which serve as a crucial profit source for major retailers. The CFPB reported over 160 million open retail card accounts last year, highlighting the risks associated with such high-interest products.
Opinions and Market Implications
Experts believe that financial institutions exploit the challenging credit situations of consumers to maintain high interest rates. A comparison indicates that rates on retail cards typically exceed those of general-purpose cards by 10 percentage points. Analysts suggest banks are unlikely to reduce rates as they have not observed a decline in customer activity.
The successful legal challenge against the CFPB's rules has resulted in a continuing burden for credit card users, particularly those with retail cards, creating significant financial strain.
