Larger banks and financial companies charged higher interest rates last year for credit cards while also engaging in “anti-competitive behavior” detrimental to customers, according to a recent report from the Consumer Financial Protection Bureau (CFPB).
“During the first half of 2023, small banks and credit unions tended to offer cheaper interest rates than the largest 25 credit card companies across all credit score tiers,” said the Feb. 16 report. The firms were found charging eight to 10 percentage points higher annual percentage rates (APR) or interest rates compared to their smaller counterparts. For a credit card consumer with an average balance of $5,000, using a small bank or credit union’s card rather than cards from big firms results in an average savings of $400 to $500 a year in interest rates.
