- The Consumer Financial Protection Bureau reviews the business practices of credit card companies.
- The CFPB has highlighted three main areas.
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The news: The Consumer Financial Protection Bureau (CFPB) studies the business practices used by credit card companies and ways to improve the consumer experience with credit cards, through a blog post.
More on this: The consumer protection watchdog has highlighted three main areas.
- Disclose anti-competitive practices. The CFPB is looking for evidence of organized behavior on the part of major credit card players. For example, he said that since 2014, major credit card companies have withheld information from credit bureaus regarding customer repayment patterns, which they previously shared. This makes it difficult for other card issuers to offer consumers competitive prices.
- Allow consumers to more easily compare, switch or refinance their credit cards. The watchdog said consumers don’t have a fair way to buy the best credit card deal: Consumers who want to check the rate they qualify for usually have to apply for the card, which requires verification of Rigorous credit which can hurt their score. – making it less attractive to shop through offers. The CFPB also noted that many credit card holders find it difficult to refinance their cards or switch issuers.
- Review of “unwanted” charges. The CFPB said many credit card companies still rely heavily on fees despite regulations aimed at getting rid of predatory practices. He noted that companies make billions of dollars on things like cash advance fees, balance transfer fees and foreign exchange fees, and suggested that competition hasn’t actually brought those down. costs.
Why it’s worth watching: The CFPB’s review of credit card practices highlights some of the key attributes of cards that are of most interest to consumers.
- Just over a quarter (25.51%) of US consumers said a low interest rate was the top feature they look for in a credit card, according to The motley madman. But without an easy way to purchase a card that offers a competitive interest rate, customers may not get the best rate. A clearer system for buying a card could ensure customers get the best possible deal, which would help improve customer satisfaction.
- Consumers also really care about fees: 22% of consumers said no annual fee was the most important feature they look for in a credit card, according to The Motley Fool. But many customers may be unaware of what other fees they are being charged, or why, which may explain why the CFPB wants to dig deeper into the fees. Clearer fee structures could solve this problem and create healthy competition in the credit card industry.
The bigger picture: The CFPB is monitoring consumer credit products more closely. It is revisit how payday advance products are classified, with a CFPB official saying some can be considered loans. And in December he open a survey of major companies buy now, pay later to determine the financial risks and benefits these offers provide.
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