NAFCU to CFPB: CU credit cards a better deal
NAFCU President and CEO Dan Berger
Oct. 3, 2013 – NAFCU President and CEO Dan Berger emphasized the superior value credit unions provide their member credit card users Wednesday in a letter to the CFPB, which held a CFPB field hearing in Chicago on the impact of the Credit Card Accountability Responsibility and Disclosure Act of 2009.
“As the CFPB continues to look into credit card practices, we urge you to consider the data we are providing to you today,” Berger wrote, referencing graphs that compare the interest rates, delinquency rates and charge-off rates of credit unions and banks from the first quarter of 2010 to the second quarter of this year.
The data presented show that credit unions charge, on average, 80 basis points less in interest rates than banks. In the second quarter of 2013, credit union delinquency rates were 0.83 percent, while banks’ were 2.42 percent. Also in that quarter, credit union charge-off rates were 2.04 percent compared to banks’ 3.65 percent.
“Credit unions are unique, and their records show that they should not be lumped in together with others as regulators seek to reign in unfair or deceptive practices or otherwise seek to regulate an industry,” Berger wrote.
Berger requested that if the CFPB pursues regulatory avenues on credit cards, it should assemble a panel of small entities, including credit unions, pursuant to the Small Business Regulatory Enforcement Fairness Act.
The CFPB report showed that, between 2008 and 2012, credit costs and the size of late fees declined for credit card consumers. It also showed that overlimit fees had been “effectively eliminated” and that “responsible access to credit remains available.”
The bureau also highlighted areas of continuing concern, such as add-on products which mislead consumers, fee harvester cards, deferred interest products and disclosures about grace periods and other issues.