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Credit Card APR Margins Hit Record High, CFPB Reports

The Consumer Financial Protection Bureau reveals that increased APR margins have led to higher profits for issuers and more costs for consumers.

Overview

  • Credit card APR margins reached a record high of 14.3% in 2023, significantly increasing issuers' profits.
  • The Consumer Financial Protection Bureau (CFPB) reports that credit card holders paid an average of $250 more in interest last year due to these higher margins.
  • The increase in APR margins has been a major driver of credit card rate hikes over the past decade, despite lower charge-off rates and a stable share of subprime borrowers.
  • The CFPB's analysis highlights the high concentration in the credit card market and practices that limit consumer choices, potentially leading to higher interest rates.
  • The report comes amid scrutiny of the credit card industry, especially following Capital One's plan to acquire Discover Financial, which could further impact competition and rates.