More Facts and Less Spin: How the CFPB Continues to Misrepresent the Credit Card Market

Weston Loyd

A new blog post from the Consumer Financial Protection Bureau (CFPB) provides a summary of the many ways the CFPB has leveraged its breadth of data to spin an unfortunately misleading picture of the highly competitive, highly regulated credit card marketplace to fit the Biden Administration’s narrative.

As the Consumer Bankers Association (CBA) has long said, facts matter when policymakers write regulations. This is especially true for the CFPB, which in recent years has sought to enact an aggressive policy agenda driven by partisan politics, not sound data, that affects a wide array of consumer financial products and services that millions of Americans use each and every day. These actions are rooted in the fundamentally flawed premise that the American banking industry lacks sufficient competition. Perhaps nowhere has this thesis been more evident than in the Bureau’s press statements and policy announcements regarding credit cards.

To correct misinformation and set the record straight, CBA has published a series of reports – aptly titled “Facts Matter” – that highlights how the Bureau regularly and increasingly misrepresents its own data to further the political objectives of this Administration.

Here are the myths the CFPB is spinning and the actual facts about the safest and most reliable credit card market in the world:

On Interest Rates

The CFPB puts its finger on the scale by including credit unions in its small issuer data when it claims large issues charge higher APRs than small issuers.

In the CFPB’s credit card data spotlight headlined, “Small issuers offer lower rates,” the Bureau uses non-representative data to make a number of troubling, unfounded statements about the credit card marketplace. First and foremost, the CFPB improperly included data about credit unions, in order to game its numbers on APRs between big and small credit card issuers.

As CBA’s fact check showed, removing credit unions from the sample shrank the difference in APRs considerably. Additionally, the CFPB failed to mention its data shows large issuers were significantly more likely to offer cards to subprime users – which is the primary way that consumers on the margin get access to the banking system and build credit. Further, large issuers had a higher share of cards that offered more features, perks, and rewards.

On Rewards

Rewards credit cards offer tangible benefits for many consumers who manage their credit effectively.

As recent research shows, the vast majority of money that’s paid into rewards cards comes from high-income consumers – with the benefits of rewards cards spread out more evenly across cardholders of all incomes. Further, it appears that rewards cards may actually spread benefits across income bands more evenly than losses, which are more likely to be concentrated amongst high-income consumers. While some have taken this research to mean its exact opposite, CBA took the time to go through the research and understand the facts.

On Competition and Choice

With over 4,000 banks providing access to financial services, there is no shortage of choice in the market. Further, CBA’s analysis of the CFPB’s own CARD Act Report data clearly shows there is robust competition in the credit card market. This includes:

  • Record marketing spend by firms to attract and compete for new customers and remain “first in wallet.”
  • Innovations by firms to make it easier for consumers to shop including the use of “soft inquiries” to make comparing rates less costly.
  • Record balance transfers that reflect consumers’ ability to switch their balances to cards with better benefits for them.
  • The fact that the market share of the top 10 issuers declined four percent from 2016 to 2022.   

The Bottom Line

Credit cards have become an easy target for politicians armed with attractive, yet empty, talking points. The fact is there are nearly 500 million credit cards in America, held by nearly 200 million people.

  • Because the banking industry is among the most competitive in the world, consumers benefit from the ability to choose from thousands of card issuers, each with unique terms and conditions, to meet their daily needs. 
  • Consumers and small businesses alike rely on credit cards to make ends meet, pay for emergency expenses, and cover the cost of everyday purchases.

Regardless of what the CFPB’s press releases may misrepresent, America’s leading banks remain fully committed to protecting and expanding access to these deeply valued financial tools. 


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