A recent report by the Consumer Financial Protection Bureau (CFPB) reveals that large banks have been imposing significantly higher interest rates compared to smaller banks and credit unions. This discrepancy in rates is causing the average borrower to lose substantial purchasing power.

CFPB Director Rohit Chopra stated, "Our analysis found that the largest credit card companies are charging substantially higher interest rates than smaller banks and credit unions." He further noted that, with over $1 trillion in credit card debt outstanding, the CFPB plans to accelerate its efforts to ensure consumers can access better rates. These improved rates could potentially save families billions of dollars annually.

According to a press release by the CFPB, their updated Terms of Credit Card Plans survey data indicates that large banks offer worse overall terms of credit as well as interest rates. The collected data shows that the 25 largest credit card issuers charge customers an average interest rate that is 10 points higher than those charged by smaller banks.

The study also found that a borrower's credit score had minimal impact on securing a better interest rate from larger banks. Regardless of credit rating levels, larger banks consistently offered worse credit rates. For instance, for a credit score between 620 and 719, large scale issuers charged an interest rate of 28.20%, while small issuers only levied an interest rate of 18.15%. It was also discovered that many of the biggest credit card lenders issued cards with interest rates exceeding 30%.

Credit card debt has become a significant burden for American consumers. A press release by LendingTree revealed that by the end of the fourth quarter of 2023, Americans had accumulated $1.129 trillion in credit card debt. This marked the third consecutive quarter where American credit card balances exceeded $1 trillion. Data from this analysis showed that at the end of 2023, the average percentage rate for all credit cards stood at 21.47%.