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The Consumer Financial Protection Bureau released a blog post targeting the growing divergence between credit card interest and charge-off rates—and previewing an inquiry into industry practices.
Diverging Rates: The CFPB says in the post that credit card companies did not decrease their prices following the Great Recession despite lower charge-off rates, which it says helps explain large credit card banks’ nearly 7% annualized return on assets.
Inquiry Coming: In the post, the CFPB says it plans to evaluate whether:
Market trends, such as increasing rewards and high switching costs, explain the industry’s persistently high interest rates.
Anti-competitive practices have driven issuers’ profits at cardholders’ expense.