CFPB planning inquiry on credit card interest rates

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.