Analysis of credit card rates and practices by Pew showed “that credit unions offered much lower APRs, less punitive penalty rates and engaged in far fewer unfair or deceptive practices than their commercial peers.” Further,
Key findings include:
- 100 percent of credit cards offered online by the leading bank card issuers continue to include practices that will be outlawed once the legislation takes effect
- Advertised credit card interest rates rose an average of 20 percent in the first two quarters of 2009, even as banks’ cost of lending declined
- 99.7 percent of bank cards allowed issuers to increase interest rates on outstanding balances – a jump from 93 percent in December
- 95 percent of bank cards permitted issuers to apply payments in a way the Federal Reserve found likely to cause substantial financial injury to consumers
- 90 percent of bank cards had penalty rate hikes which for the most part are imposed by “hair triggers” of one or two late payments in a year
The conclusion is:
Although credit unions control only a small portion of credit card outstandings, comparisons between credit union and bank product models illustrate options available to consumers and potential benchmarks for future regulatory rulemaking efforts.
