CONSUMER FINANCIAL PROTECTION BUREAU | OCTOBER 2023
The Consumer Credit Card
Market
2 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Table of contents
Table of contents ..............................................................................................................2
Executive summary ..........................................................................................................4
1. Introduction ................................................................................................................8
1.1 Report mandate ......................................................................................... 8
1.2 Data sources ............................................................................................. 10
1.3 Definitions.................................................................................................12
2. Market dynamics......................................................................................................15
2.1 Cardholders...............................................................................................15
2.2 Issuers ...................................................................................................... 18
2.3 Co-brand partners ................................................................................... 25
2.4 Networks .................................................................................................. 27
2.5 Debt collectors ......................................................................................... 28
3. Use of credit .............................................................................................................31
3.1 Purchase volume .......................................................................................31
3.2 Debt levels ................................................................................................ 33
3.3 Repayment ............................................................................................... 36
3.4 Non-payment ........................................................................................... 45
4. Cost of credit ............................................................................................................48
4.1 Total cost of credit ...................................................................................49
4.2 Interest ..................................................................................................... 52
4.3 Fees........................................................................................................... 62
4.4 Net cost of credit ......................................................................................68
3 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
4.5 Rewards earned .......................................................................................69
4.6 Persistent debt ..........................................................................................71
5. Availability of credit ................................................................................................74
5.1 New accounts ........................................................................................... 74
5.2 Existing accounts ..................................................................................... 87
6. Practices of credit card issuers ............................................................................98
6.1 Rewards....................................................................................................98
6.2 Installment plans ................................................................................... 106
6.3 Balance transfers .................................................................................... 115
6.4 Cash advances ......................................................................................... 119
6.5 Over-limit transactions.......................................................................... 124
6.6 Dispute resolution ..................................................................................125
6.7 Account servicing ................................................................................... 129
6.8 Debt collection ........................................................................................ 141
7. Innovation ...............................................................................................................159
7.1 Innovations discussed above ................................................................. 159
7.2 Additional developments....................................................................... 165
7.3 Credit card competitors ..........................................................................172
4 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Executive summary
This study represents the CFPB’s sixth biennial report on the state of the consumer credit card
market and continues the approach of the CFPB’s previous reports. The CFPB revisits similar
baseline indicators to track key market developments and consumer risks as well as the
adequacy of consumer protections. Throughout this report, we continue to examine trends by
card type and credit score tier, but further segment consumers with the highest scores into two
new groups, prime plus (720 to 799) and superprime (800 and above). In a new section, this
report examines the market dynamics, concentration, and profitability of the credit card
industry in detail, complementing other regulators’ examination of the safety and soundness of
card issuers. We explore new topics that have become more important as the market continues
to evolve. For example, the current report explores the prevalence and cost of installment plan
features and the dollar value of credit card rewards. Additionally, we discuss issuer practices
related to dispute resolution, minimum payments, and servicemember rate reductions.
• Use of credit: Credit card debt at the end of 2022 surpassed $1 trillion for the first time
in our data, but total outstandings remain below pre-pandemic levels when adjusted for
inflation. Spending grew to new highs of $846 billion in the fourth quarter of 2022. At
the same time, total payments rose, and cardholders paid significantly more of their
monthly balances with a greater share of accounts entirely paid off each month.
Delinquency and charge-off rates in 2022 were at lower levels than 2019 but increasing,
presumably rising with the expiration of COVID-19 related financial relief.
• Overall market size and structure: Nearly 4,000 issuers, together with dozens of
co-brand merchant partners and four major networks, provide cards to over 190 million
consumers. The top ten credit card issuers still represent over four-fifths of consumer
credit card loans, but the next 20 biggest issuers’ market share has grown since 2016.
• Competition and profitability: For companies involved in credit card issuance,
servicing, and debt collection, the industry remains profitable. Issuers’ profitability fell in
2020 but spiked in 2021 and remained at or above 2019-levels in 2022 with an average
return on assets of six percent for general purpose cards and two percent on private label
portfolios. Point-of-sale; Buy Now, Pay Later (BNPL); and fintech personal loans as well
as “pay-by-bank” options increasingly compete with traditional credit cards for purchase
volume and balances.
• Cost of credit: By some measures, credit cards have never been this expensive, as
issuers charged more than $130 billion in interest and fees in 2022 alone. By the end of
2022, interest and fees as an annualized percentage of balances, or the total cost of
5 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
credit, was almost 18 percent on general purpose cards and over 21 percent on private
label accounts. Many cardholders with subprime scores are now paying 30 to 40 cents in
interest and fees per dollar borrowed each year. Federal Reserve rate increases triggered
upward repricing on most general purpose cards, and issuers continue to price well
above the prime rate, with an average annual percentage rate (APR) margin of 15.4
percentage points. Fee volume now exceeds pre-pandemic levels. Annual fees grew in
2021 and 2022, while late fees returned to 2019 levels at $14.5 billion as did the
cardholder cost of balance transfers and cash advances.
• Rewards: The dollar value of rewards earned by general purpose cardholders exceeded
$40 billion for mass market issuers in 2022. Transacting accounts, or those where the
cardholder pays the full statement balance each month, are increasingly benefitting from
credit card use. But, when a consumer revolves a balance on their credit card, the cost of
interest and fees almost always exceeds the value of rewards the consumer may have
earned. Cardholders’ rewards redemptions have increased, but consumers still forfeit
hundreds of millions of dollars in rewards value each year.
• New features and products: Installment plan features which permit cardholders to
convert a credit card purchase to a lower-cost, fixed-rate loan comprise a small but
growing segment of the market designed to compete with BNPL. These issuer plans often
offer lower finance charges than on revolving debt, but consumers may struggle to make
higher monthly payments. “Credit card-as-a-service” platforms from fintechs to
traditional banks have streamlined co-brand partnerships to improve user experience
and offer novel rewards with smaller retailers. Some issuers are now approving
consumers with only soft inquires on consumers’ credit reports; others are underwriting
consumers without credit scores using new datasets and modeling techniques outside
the traditional credit reporting system. Issuers are providing cardholders with more
flexible repayment terms and new payment options, including through a growing
number of digital wallets.
• Persistent debt: With the average minimum payment due increasing to over $100 on
revolving general purpose accounts in 2022, more users are incurring late fees and
facing higher costs on growing debt. We find one in ten general purpose accounts are
charged more in interest and fees than they pay toward the principal each year,
indicating a pattern of persistent indebtedness that could become increasingly difficult
for some consumers to escape. Public relief programs in 2020 and 2021 enabled some
consumers to pay down credit card balances, but the number of cardholders facing
persistent debt has begun to climb.
6 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
• Availability of credit: Most measures of credit card availability grew in 2021 and
2022 after a sharp decrease in access during 2020. Application volume for general
purpose credit cards reached a new peak in 2022, as issuers increased acquisition efforts
and consumer demand grew. For retail cards, in contrast, application volume fell from
2020 to 2022. Approval rates more than rebounded for all card types. The recent upticks
in marketing, applications, and approvals led to significant growth in credit card
originations in 2021 with even more activity in 2022. Consumers with below-prime
scores opened more than 80 million new credit card accounts in 2021 and 2022
combined compared to 63 million over the two year period from 2019 through 2020.
Total credit line across all consumer credit cards increased to over $5 trillion in 2022 but
remained below 2017 levels in real terms. After declining in 2020, issuers initiated credit
line increases more frequently in 2021 and 2022 than they did prior to the pandemic but
decreased lines or closed accounts at rates similar to those seen over the past decade.
• Disputes: Credit card disputes spiked with pandemic-related cancellations and supply
chain issues in mid-2020, declined in 2021, but then rose in 2022 as spending grew.
Disputed transaction volume for mass market issuers was up 50 percent from 2019 levels
to almost $10 billion in 2022, and chargebacks increased more than 80 percent from
$3.2 billion to $5.9 billion.
• Account servicing: Cardholders increasingly use and service their cards through
digital portals, including those accessed via mobile devices. Three in four general
purpose accountholders are now enrolled in issuers’ mobile apps, and adoption is
increasing, notably for those under 65. The use of automatic payments has likewise
continued to climb. New artificial intelligence (AI)/machine learning (ML) technologies
are changing how providers service accounts, but concerns regarding the use and sharing
of consumer data remain significant, particularly among older cardholders.
• Debt collection: Compared to prior surveys, the use of email in collections continued
to increase in 2022, with consumers opening about one-third of messages. Issuers
seemed to leverage the text messaging (or SMS) channel significantly more in 2022 than
in prior years with a relatively low opt-out rate at 1.3 percent. New enrollments in loss
mitigation programs and total inventory in those programs declined. Post-charge-off
settlements fell significantly from their previous peaks during the pandemic. All issuers
who sold debt reported deleting the charged-off tradelines from credit reports upon sale,
potentially resulting in an incomplete view of consumers’ debt burden, likelihood of
default, and history in the credit reporting system.
Throughout this report, we highlight potential areas of concern in the consumer credit card
market. Given rising balances and credit costs, more cardholders may struggle to pay their
7 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
credit card bill on time, especially with amounts past-due, overlimit, or under an installment
plan added to the minimum payment due. As such, the CFPB will continue to monitor
assessments of late fees, reliance upon penalty repricing, and debt collection practices, alongside
the disclosure of minimum payments in accordance with CARD Act requirements. Issuers’
margins are increasing as they price APRs further above the prime rate, potentially signaling a
lack of price competition. Instead, companies offer more generous rewards and sign-up bonuses
to win new accounts, largely benefitting those with higher scores who pay their balances in full
each month. The CFPB will explore ways to promote comparison shopping on purchase APRs—a
major cost of credit cards that is often unknown to consumers prior to card issuance. We will
also monitor changes in rewards value if issuers look to cut costs in response to lower revenue.
We encourage new entrants—both bank and non-bank—to work on providing consumers with
more transparency, better experiences, and greater access to credit, so long as they comply with
existing consumer finance laws.
8 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
1. Introduction
In 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure Act of
2009 (CARD Act or Act).
1
The Act made substantial changes to the credit card market. The
CARD Act mandated new disclosures and underwriting standards, curbed certain fees, and
restricted interest rate increases on existing balances.
Among the CARD Act’s many provisions was a requirement that the Board of Governors of the
Federal Reserve System (Federal Reserve Board) report every two years on the state of the
consumer credit card market. With the passage of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act) in 2010, that requirement transferred to the
Consumer Financial Protection Bureau (CFPB) alongside broader responsibility for
administering most of the CARD Act’s provisions.
2
This is the sixth report published pursuant to
that obligation, building on prior reports published by the CFPB in 2013, 2015, 2017, 2019, and
2021.
3
1.1 Report mandate
As mandated by the CARD Act, this report represents the CFPB’s sixth biennial review, “within
the limits of its existing resources available for reporting purposes, of the consumer credit card
1
The Act superseded a number of earlier regulations that had been finalized, but had not yet become effective, by the
Office of Thrift Supervision (OTS), the National Credit Union Administration (NCUA), and the Board of Governors
of the Federal Reserve System. Those earlier rules were announced in December of 2008 and published in the
Federal Register the following month. See 74 FR 5244 (Jan. 29, 2009); 74 FR 5498 (Jan. 29, 2009). The rules were
withdrawn in light of the CARD Act. See 75 FR 7657, 75 FR 7925 (Feb. 22, 2010).
2
15 U.S.C. § 1616(a) (2012).
3
See CFPB, Card Act Report (Oct. 1, 2013) (2013 Report), http://files.consumerfinance.gov/f/201309_cfpb_card-
act-report.pdf; CFPB, The Consumer Credit Card Market (Dec. 2015) (2015 Report),
http://files.consumerfinance.gov/f/201512_cfpb_report-the-consumer-credit-card-market.pdf; CFPB, The
Consumer Credit Card Market (Dec. 2017) (2017 Report),
https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2017.pdf; CFPB, The
Consumer Credit Card Market (Aug. 2019) (2019 Report),
https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2019.pdf; CFPB, The
Consumer Credit Card Market (Sep. 2021) (2021 Report),
https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2021.pdf. The CFPB
also held a conference in 2011 on developments in the credit card market. See Press Release, CFPB, CFPB Launches
Public Inquiry on the Impact of the Card Act (Dec. 19, 2012), https://www.consumerfinance.gov/about-
us/newsroom/consumer-financial-protection-bureau-l aunches-public-inquiry-on-the-impact-of-the-card-act.
9 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
market.”
4
As was true in the CFPB’s previous reports, it addresses the following topics explicitly
enumerated by Congress for inclusion in this review:
1. the terms of credit card agreements and the practices of credit card issuers;
2. the effectiveness of disclosure of terms, fees, and other expenses of credit card plans;
3. the adequacy of protections against unfair or deceptive acts or practices relating to credit
card plans; and
4. whether or not, and to what extent, the implementation of this Act and the amendments
made by this Act have affected:
a. the cost and availability of credit, particularly with respect to non-prime
borrowers;
b. the safety and soundness of credit card issuers;
c. the use of risk-based pricing; or
d. credit card product innovation.
5
The CARD Act also requires the CFPB to “solicit comment from consumers, credit card issuers,
and other interested parties” in connection with its review.
6
As in past years, the CFPB has done
so through a Request for Information (RFI) published in the Federal Register, and we discuss
specific evidence or arguments provided by commenters throughout the report.
7
4
Reference in this report to any specific commercial product, service, firm, or corporation name is for the information
and convenience of the public and does not constitute endorsement or recommendation by the CFPB. The CFPB
notes that many players in the credit card industry are also entities with which the CFPB has one or more
institutional relationships, such as a research partnership or membership on a CFPB-convened body.
5
15 U.S.C. § 1616(a) (2012). While this report presents information which may be relevant to assessments of safety
and soundness issues relating to credit card issuers, the CFPB does not produce any further analysis on this subject
in this report. The prudential regulators (e.g., the Office of the Comptroller of the Currency, the Board of Governors
of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union
Administration) have the primary responsibility for monitoring the safety and soundness of financial institutions.
6
15 U.S.C. § 1616(b) (2012).
7
Request for Information Regarding Consumer Credit Card Market, 88 FR 5313 (Jan. 27, 2023).
10 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
1.2 Data sources
This report leverages several data sources, including:
1. The CFPB’s Consumer Credit Panel (CCP): a comprehensive, national 1-in-48
longitudinal sample of de-identified credit records maintained by one of the three
nationwide consumer reporting agencies. These data contain no personal identifiers,
such as name, address, or Social Security number;
8
2. The Federal Reserve Board’s “Y-14M” (Y-14) Data Collection: monthly portfolio- and
account-level data from bank holding companies that have total consolidated assets of
$100 billion or more.
9
The de-identified account-level data received by the CFPB cover
the period from the middle of 2012 through the present and accounted for just under 70
percent of outstanding balances on consumer credit cards as of year-end 2022;
10
3. Data provided in response to two distinct sets of filing orders:
a. Mass Market Issuer (MMI) Data: summary data requested from a group of major
credit card companies covering topics included in neither the CCP nor Y-14, such
as applications, approvals, rewards, disputes, account servicing, debt collection,
and other issuer practices;
b. Specialized Issuer Data: summary data requested from a diverse group of issuers
that in places supplement the Y-14 to allow for a broader or more detailed
perspective into credit card usage and cost for specific facets of the market.
8
Other CFPB products, such as Consumer Credit Trends reports, rely on these data.
9
See Bd. of Governors. of the Fed. Rsrv. Sys., Reporting Forms FR Y-14M,
https://www.federalreserve.gov/apps/reportingforms/Report/Index/FR_Y-14M (last accessed Jan. 11, 2023) for
more information on the Y-14M collection. Information in the Y-14 data do not include any personal identifiers.
Additionally, accounts associated with the same consumer are not linked across issuers. The Y-14 does not include
transaction-level data. In addition, this study reports only aggregate measures and reveals no information about any
specific issuer. These data replace loan-level credit card data collections the CFPB previously collected. The CFPB no
longer requires or oversees the collection of any loan-level credit card data on an ongoing basis.
10
The Federal Reserve Board has expanded the fields it collects from bank holding companies over time and has
changed the asset threshold for submission from $50 billion to $100 billion since the collection began; therefore,
some results reported below do not extend all the way back to 2012. Additionally, these data are periodically revised
retroactively, and are therefore not fully static. These issuers represent a large portion of the market but are not
necessarily representative of the portion of the market not covered by the data the CFPB receives. The remainder of
the market, representing a substantial number of consumer credit cards, are outside the scope of the Y-14 data used
by the CFPB because, among other reasons, they are issued by banks owned by bank holding companies with assets
of less than $100 billion, or are issued by non-banks, such as credit unions. Results reported from Y-14 data
throughout this report should be interpreted accordingly.
11 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Where these data supplement Y-14 data, those data are collectively called “Y-
14+;”
11
4. The CFPB’s Quarterly Credit Card Agreement Database: a quarterly collection of most
credit card agreements available to consumers as submitted by issuers with 10,000 or
more accounts as of the last business day of the calendar quarter;
12
5. RFI Comments: 2,936 comments in response to a Federal Register notice addressing all
aspects of the review described in Section 1.1 above. 2,728 were submitted as part of a
consumer campaign that wrote, “I support the Consumer Financial Protection Bureau’s
work reviewing the work of Credit Card companies and reining in abusive practices. I’ve
had my own bad experiences, and I’m grateful that the CFPB is fighting for me.” 208
were not submitted as part of that campaign. Of the substantive, credit-card related
comments that were either not part of the campaign or went beyond the campaign’s
language, 369 were submitted by individual consumers, nine by consumer advocacy
organizations, eight by trade groups, five by credit unions, one by a government
organization, one by an academic, one by a debt collection agency, one by a fintech, and
two in an “other” category;
6. The CFPB’s Consumer Complaint Database: a compilation of complaints on credit cards
that consumers have submitted to the CFPB’s Office of Consumer Response;
13
and
7. Third-Party Sources: commercially available or public sources that focus on the credit
card industry, including mail volume monitoring reports, industry analyst reports,
Securities and Exchange Commission (SEC) filings, studies and data produced by other
regulators, academic scholarship, and the press. When adjusting data to account for
11
The Y-14 data cover a large but not representative portion of the credit card market. The Y-14+ data cover a larger
and more representative portion of the credit card market, but the remaining uncovered portion is still substantial,
and the Y-14+ data should similarly not be considered representative of that uncovered portion.
12
12 CFR 1026.58(c)(5). The database contains most credit card agreements as of quarter’s end from the third quarter
of 2011 to the fourth quarter of 2014, and from the first quarter of 2016 to present. After the fourth quarter of 2014,
the CFPB temporarily suspended collection of agreements for one year while the CFPB developed a more
streamlined and automated electronic submission system. Submission and publication resumed in the first quarter
of 2016. 80 FR 21153 (Apr. 17, 2015); 12 CFR 1026.58(g). Agreements in the second quarter of 2019 are incomplete
due to technical submission issues at the CFPB, and agreements in 2020 and 2021 may include omissions due to the
CFPB’s previous COVID-19 regulatory flexibility statement, see CFPB, Statement on Supervisory and Enforcement
Practices Regarding Bureau Information Collections for Credit Card and Prepaid Account Issuers (Mar. 26, 2020),
https://files.consumerfinance.gov/f/documents/cfpb_data-collection-statement_covid-19_2020-03.pdf.
13
CFPB, Consumer Complaint Database, https://www.consumerfinance.gov/data-research/consumer-comp laints/
(last accessed June 27. 2023).
12 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
inflation, we use the Consumer Price Index (CPI) for all urban consumers from the
Bureau of Labor Statistics.
14
The limitations inherent to the CFPB’s methodology in this report are substantially similar to
those inherent in the CFPB’s previous reports on the credit card market.
15
All results reported
from data throughout this report aggregate results from multiple industry participants. Each
source has particular limitations, as not all data rely upon consistent definitions or cover the
same periods, products, or phenomena. Additionally, the available data generally do not allow
for definitive identification of causal relationships. Accordingly, correlations presented
throughout this report do not necessarily indicate causation.
1.3 Definitions
This subsection defines certain additional terms used frequently throughout this report. This is
not exhaustive of all remaining defined terms in this report; for example, other defined terms
more particular to certain sections or subsections of this report are introduced in those sections
or subsections.
Throughout this report, the CFPB refers to consumer credit scores. Lenders typically determine
consumers’ credit eligibility and pricing using credits scores based on data from major national
consumer reporting agencies alongside other data sources. When reporting results by credit
scores in this report, scores are generally grouped into six tiers: superprime (800 or greater),
prime plus (720 to 799), prime (660 to 719), near-prime (620 to 659), subprime (580 to 619),
and deep subprime (579 or less).
16
Previous reports only used five tiers as they did not break out
the prime plus category. Using six tiers better captures differences in cost, use, and availability
for the almost two-thirds of cardholders with scores greater than 720. Where historical data are
used or in places with limited coverage of cardholders with scores below 620, fewer than six
credit score tiers may be represented.
Data relied upon in this report include widely used, commercially available credit scores, but as
issuers use different credit scores,
17
a given account’s “credit score tier” may differ from bank to
14
U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers, https://www.bls.gov/cpi/ (last
accessed June 27, 2023).
15
See, e.g., 2015 Report, at 27.
16
See Section 2.1 for the distribution of cardholders by credit score tier.
17
It is also typical for lenders to supplement commercially-available scores with proprietary models to assess an
account’s creditworthiness.
13 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
bank. Different credit score models, while fundamentally similar, may include or exclude
different information or weight data differently when predicting a consumer’s relative likelihood
of default. Credit scores in the CCP and Y-14 are updated regularly. Unless noted otherwise,
accounts and consumers are classified into tiers based on their credit scores at that point in
time; therefore, the number of observations in a tier change over time. The CFPB believes that
different credit scoring methodologies, over the time periods and set of market participants
examined in this report, are sufficiently consistent to remain informative and useful to report
aggregate results and changes over time by credit scores.
18
Outstandings, or the nominal amount owed by consumers on a specific date, is one method for
measuring consumer credit card indebtedness. A second method entails measuring balances, or
the amount owed by consumers at the end of their billing cycle, within a given month. This
report uses the term “debt” to refer to both of these amounts interchangeably.
The flexibility in use and repayment of credit cards leads to two types of credit card debt.
Consumer credit card debt includes both “revolving” debt—the amount owed on accounts for
which a positive cycle beginning balance was not paid in full by the statement due date—and
“transacting” debt—the amount owed on accounts for which the non-zero, non-negative balance
was paid in full by the statement due date. Most credit cards provide a grace period where, if a
cardholder does not carry a balance, they will not accrue interest prior to the due date.
Therefore, revolving debt typically bears interest starting from the date of purchase while
transacting debt under a grace period does not. Cardholders at any given point can be classified
as a “revolver” or a “transactor” based on whether they pay their statement in full each month.
Throughout this report, we refer to different, and at times overlapping, types of credit cards
when describing the market:
• “General purpose” cards are those that transact over a network accepted by a wide
variety of merchants;
• “Private label” cards can only be used at one merchant or a small group of related
merchants and lack network branding;
19
18
See 2021 Report, supra note 3, at 20.
19
Private label cards generally transact over a private network maintained by the issuer to which the merchant is
granted access. Some cards can transact over both a private label network and a general purpose network. For
example, a consumer may be issued a card that features a merchant’s brand as well as a general purpose network
brand. When used at the merchant, the transaction may be routed over the issuer’s private network, but at other
merchants the transaction is routed over the general purpose network. For the purposes of this report, those cards
are considered to be general purpose credit cards except where explicitly noted otherwise.
14 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
• “Co-brand” cards are a subset of general purpose cards that include both the badge of a
network and branding of a specific merchant such as a retailer, airline, or hotel chain;
and
• “Retail” cards are a combined category of both private label cards and some general
purpose, co-brand cards managed by a business unit that specializes in credit cards
offered in partnership with specific merchants. Retail cards do not include network-
branded cards that carry hotel or airline branding, even if those cards are managed by a
business unit that specializes in retail credit cards. In some sections, data related to co-
brand cards managed by a retail unit are not included in general purpose totals, as noted.
15 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
2. Market dynamics
This new section of the report describes players in the consumer credit card market. This report
generally focuses on the state of the consumer credit card market through the lens of
cardholders; therefore, this section first establishes the number of consumers with at least one
credit card. Then, it addresses issuers as the provider of credit and primary point of contact for
consumers by detailing the breadth and concentration of the market for credit card issuance, as
well as issuer profitability. By examining portfolio-level revenue and expenses, we establish a
foundation on which to analyze credit card market competition and innovation moving forward.
However, issuers are not the only companies in the credit card payments ecosystem. As such,
this chapter also describes the role of merchant partners in offering co-brand credit cards and
concludes with an overview of card networks and the credit card debt collection industry.
2.1 Cardholders
The CFPB estimates that 190.6 million of the 258.3 million adults in the United States (74
percent) had a credit card account in their name as of the end of 2021.
20
Around 90 million
consumers hold only a general purpose credit card, 10 million hold only a private label card, and
90 million have at least one of each. The share of consumers with credit cards differs by credit
score and age over time.
20
This estimate is according to coverage of credit records present in the CCP sample, though it does not include
authorized users, who are individuals designated by the primary accountholder to use the same credit account. For
the number of adults in the United States, we rely upon data from the 2020 census. See United States Census
Bureau, U.S. Adult Population Grew Faster Than Nation’s Total Population From 2010 to 2020 (Aug. 2021),
https://www.census.gov/library/stories/2021/08/united-states-adult-population-grew-faster-than-nations-total-
population-from-2010-to-2020.html. A recent report from the Federal Reserve finds 82 percent of consumers report
having at least one credit card. See Federal Reserve Board, Report on the Economic Well-Being of U.S. Households
in 2022, at 44 (May 2023), https://www.federalreserve.gov/publications/files/2022-report-economic-well-being-
us-households-202305.pdf. Throughout this report, some statistics are about three percent different compared to
what is reported in the 2021 Report, due to revisions to the data and methodology.
16 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
TABLE 1: CONSUMERS BY CARDHOLDING BEHAVIOR, YEAR-END 2021 (CCP)
Credit score
tier
General
purpose
card(s) only
Private label
card(s) only
At least one
of each
No credit
card
Superprime 21.7M 0.5M 26.0M 0.1M
Prime plus 36.0M 3.8M 32.4M 6.9M
Prime 12.7M 1.7M 17.1M 6.8M
Near-prime 6.8M 1.2M 7.8M 1.7M
Subprime 5.3M 1.2M 4.0M 2.1M
Deep subprime 6.2M 1.5M 3.0M 7.1M
Thin or stale
score file
21
1.4M 0.1M 0.1M 33.4M
As shown in Figure 1, the share of consumers with below-prime credit scores who have at least
one credit card rebounded as the nation emerged from the pandemic. Across time, a larger share
of consumers with near-prime credit scores has credit cards than those with subprime, who in
turn are more likely to have a credit card than consumers with deep subprime credit scores.
However, as of year-end 2022, cardholding by adults with deep subprime credit scores was at its
highest level since at least 2013. All three below-prime score groups saw dips in credit card
ownership in 2020 and early 2021, but it swiftly rebounded up to or above pre-pandemic levels
in late 2021 and 2022.
21
This measure may include fragmented files.
17 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 1: QUARTERLY SHARE OF BELOW-PRIME CONSUMERS WITH AT LEAST ONE CREDIT CARD
(CCP)
Older consumers are consistently more likely to carry a credit card, but the share of younger
consumers with a credit card has trended slightly up over the last 10 years.
22
From 2013 to
2022, on average, 88 percent of consumers over 65 had at least one credit card. In 2013 and
2014, only 56 percent of consumers aged under 25, and 76 percent of consumers aged 25 to 64
had a card. By the end of 2022, these shares had grown to 64 percent for consumers under 25
and 82 percent for consumers in the middle age range.
23
22
A consumer advocacy group wrote that older Americans face unique challenges with credit card use and access:
“Older Americans are more likely than their younger counterparts to be unable to pay or make only a partial
payment on their credit cards. Therefore, the Bureau must pay special attention to policing the use of unfair,
deceptive, or abusive practices in the credit marketplace to harm consumers within this age group. Similarly, the
CFPB must work to ensure there are responsible credit options for older consumers." See AARP comment at 3.
23
One consumer and a credit union wrote that cards should be more accessible to young people, see Mindy Cole and
Randolph-Brooks Federal Credit Union comments, but more commentors were concerned that getting a credit card,
and subsequently accumulating credit card debt, was too easy for younger borrowers, see New York City Department
of Consumer and Worker Protection at 4, Deonet Wolfe, JoEllen Rudolph, and Nancy Petranto comments.
83%
84%
84%
84%
84%
84%
84%
83%
83%
84%
62%
63%
65%
67%
67%
69%
70%
67%
68%
68%
25%
27%
30%
32%
34%
36%
37%
32%
37%
42%
0%
20%
40%
60%
80%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Near-prime Subprime Deep subprime
18 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 2: QUARTERLY SHARE OF SCORED CONSUMERS WITH AT LEAST ONE CREDIT CARD, BY AGE
(CCP)
2.2 Issuers
2.2.1 Concentration
About 4,000 financial institutions offer credit cards, yet a handful of issuers represent an
overwhelming majority of credit card debt.
24
The top 10 issuers by average credit card
outstandings represented 83 percent of credit card loans in 2022, continuing a decline from 87
percent in 2016.
25
The next 20 issuers by reported credit card debt accounted for 12 percent, an
increase of four percentage points over the past six years. 3,800 smaller banks and credit unions
account for the remaining five to six percent of the market. No single issuer outside the top 15
represented more than one percent of total credit card loans in regulatory filings.
24
One commentor wrote a letter arguing that the current credit card market is highly concentrated and features high
interest rates, excess returns for credit card issuers, and regular antitrust suits, see Tristan Campbell comment.
Another individual wrote that credit cards are uniquely competitive compared to other financial services, see Nick
Meyer comment.
25
Although concentration appears to have declined in recent years, fewer banks now issue credit cards and the top
banks represent a larger share of the market than twenty years ago. In 1994, about 6,000 depository institutions
issued credit cards and the top 10 largest credit card issuers held about 57 percent of loans. See GAO, U.S. Credit
Card Industry: Competitive Developments Need to Be Closely Monitored (Apr. 28, 1994),
https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-94-23/html/GAOREPORTS-GGD-94-23.htm.
56%
59%
61%
62%
63%
63%
62%
60%
63%
64%
76%
77%
78%
79%
79%
80%
80%
80%
81%
82%
89%
89%
89%
89%
88%
88%
88%
88%
88%
88%
0%
20%
40%
60%
80%
100%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Under 25 25 to 64 Over 65
19 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 3: ANNUAL MARKET SHARE BY AVERAGE CREDIT CARD LOANS (REGULATORY FILINGS)
26
As has been true for the past decade, credit unions represent less than one-tenth of total
outstandings, but their share of loans has grown from 6.6 percent of outstandings in 2016 to 7.3
percent in 2022.
27
Some consumers may increasingly choose to open cards at credit unions as
the Federal Credit Union Act limits APRs to a maximum of 18 percent.
28
Evidence also suggests
that smaller issuers may charge lower fees than the top banks.
29
The market for private label credit cards is more concentrated than that of the overall consumer
credit card market with fewer players representing more of the market. The top six issuers in the
private label credit card market represented 95 percent of private label outstandings in 2022.
30
26
For banks, we use data from the regulatory Reports of Condition and Income (Call Reports) on “Average Credit
Card Loans to Individuals (Include Credit Card and Related Plans).” This excludes small banks under a certain asset
threshold not required to report these data. For bank holding companies, we use “Average Consumer Loans: Credit
Cards” from holding company regulatory financials. For Credit Unions, we use “Average Unsecured Credit Card
Loans” from credit union regulatory financial statements.
27
This share includes three credit unions in the top 30 largest credit card issuers. Credit union commentors and their
trade associations wrote about the challenges they face competing with banks while serving their members. See
Credit Union National Association, NAFCU, Randolph-Brooks Federal Credit Union, CrossState Credit Union
Association, and First Service Credit Union comments.
28
See National Credit Union Administration, Permissible Loan Interest Rate Ceiling Extended (Mar. 2023),
https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/permissible-loan-interest-rate-
ceiling-extended-
2#:~:text=The%20Federal%20Credit%20Union%20Act%20generally%20limits%20federal%20credit%20unions,int
erest%20rate%20ceiling%20on%20loans..
29
See Joanna Cohen, Lucas Nathe, László Sándor, Margaret Seikel, and Wei Zhang, Credit card late fees (Late Fee
Report), CFPB, at 15 (Mar. 2022), https://www.consumerfinance.gov/data-research/research-reports/credit-card-
late-fees/.
30
The Nilson Report, No. 1226.
87.0%
84.7%
84.4%
84.2%
83.4%
83.1%
82.9%
7.6%
9.9%
10.3%
10.4%
11.1%
11.3%
11.6%
5.4%
5.4%
5.4%
5.4%
5.5%
5.6%
5.5%
2016 2017 2018 2019 2020 2021
2022
0%
15%
30%
45%
60%
75%
90%
Top 10 issuers Next 20 issuers All other issuers
20 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Notably, the use of private label cards has been declining, potentially due to increased
competition from other products.
31
2.2.2 Profitability
Credit card issuers’ profitability is relevant to consumers, as the revenue and expenses of credit
card companies drive the cost and value of the product. The returns associated with credit card
operations consistently exceed earnings for other bank activities.
32
While banks with a credit
card business may also engage in other banking activities, this section is focused solely on the
revenue, expenses, and profitability of banks’ domestic consumer card portfolios. In this report,
we use Return on Assets (ROA) to evaluate the profitability of credit card portfolios. ROA is
equal to net income related to credit card activities divided by average credit card receivables.
Individual expense and revenue line items are expressed as a percentage of average receivables
to provide insight into how efficiently the industry manages expenses and converts balances into
revenue.
33
Although certain revenues and expenses, such as those related to interchange and
rewards, fluctuate based on purchase volume rather than outstandings, we present line items
relative to receivables for comparison purposes. The CFPB has not assessed issuer profitability
in this manner in previous iterations of this report but has examined this topic in other
publications.
34
The average ROA on credit card lending activities for banks in the Y-14+ was 5.9 percent on
general purpose portfolios and 2.1 percent on private label portfolios in 2022.
35
While these
rates are similar to that observed in 2019, ROA experienced a decrease in 2020 and then a spike
31
For further discussion on debt and purchase volume by card type, see Section 3. For further discussion of
competitors, see Section 7.
32
See Board of Governors of the Federal Reserve System, Report to the Congress on the Profitability of Credit Card
Operations of Depository Institutions (Jul. 2021),
https://www.federalreserve.gov/publications/files/ccprofit2021.pdf
33
Although certain revenues and expenses, such as those related to interchange, fluctuate based on purchase volume
rather than outstandings, we present line items relative to receivables for comparison purposes.
34
Margaret Seikel, Examining the factors driving high credit card interest rates, CFPB (Aug 12, 2022),
https://www.consumerfinance.gov/about-us/bl og/examining-the-factors-driving-high-credit-card-interest-rates/.
35
This estimate is according to coverage of consumer credit card portfolios for the card issuers in the Y-14+ dataset. A
recent report from the Federal Reserve found an average ROA for the eight largest credit card banks of 4.71 percent
in 2022. See Bd. of Governors of Fed. Rsrv. Sys., Profitability of Credit Card Operations of Depository Institutions
(July 2023). A paper using the Y-14 and different groupings of portfolios found a quarterly ROA typically between 1
and 2 percent. See Robert Adams et al., Credit Card Profitability, Bd. of Governors for the Fed. Rsrv. Sys.,
(published Sept. 9, 2022, updated Apr. 20, 2023), https://www.federalreserve.gov/econres/notes/feds-notes/credit-
card-profitability-20220909.html. The Federal Deposit Insurance Corporation (FDIC) estimated ROA was 3.7
percent for credit card banks in 2022. See FDIC, Quarterly Banking Profile, at 12 (2023),
https://www.fdic.gov/analysis/quarterly-banking-profile/qbp/2023mar/.
21 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
the next year, largely explained by changes in loan loss provision expense.
36
The ROA on general
purpose portfolios exceeded that of private label cards for each year in our data.
FIGURE 4: ANNUAL AVERAGE RETURN ON ASSETS (Y-14+)
Net interest income is the primary driver of card issuer profitability for both general purpose
and private label cards, comprising 10.3 and 9.2 percent of receivables in 2022, respectively.
Figure 5 displays the major components of ROA as shares of credit card receivables: net interest
income, net non-interest income, and loan loss provision expense. For both portfolios, net
interest income positively affects profits, while net non-interest income and loan loss provision
expense each have a net negative impact on profits.
FIGURE 5: ANNUAL AVERAGE RETURN ON ASSETS, 2022 (Y-14+)
36
Many consumers submitted comments expressing frustration over credit card companies’ high levels of profit. See
Comment Letters submitted by Chelsea Yorkshire, Thomas Dunn, Kathi Thonet, Maureen Knutson, Diane Swann,
and Natalia Vann.
4.5%
2.3%
9.6%
5.9%
2.4%
-0.1%
5.4%
2.1%
2019 2020 2021 2022
0%
2%
4%
6%
8%
10%
General Purpose Private Label
22 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
REVENUE
Interest income is the primary revenue source for the card portfolios of major banks.
37
Figure 6
shows that, for general purpose card issuers, the next largest line item is interchange income,
38
whereas, for private label, it is fee income.
39
Although general purpose card portfolios are less
reliant on fees than private label portfolios, fee income as a proportion of receivables is
significant for both, representing 1.5 percent and 3.9 percent of managed receivables in 2022 for
general purpose and private label cards, respectively. Interchange income has increased from six
percent of general purpose receivables in 2019 to eight percent in 2022, but it has not changed
significantly as a share of purchase volume (1.8 percent). Interchange revenue has grown
proportionally with spending and has grown faster than receivables. For private label portfolios,
multiple issuers reported negative values for “other non-interest income.”
40
While the specific
reason for negative other income varies by issuer, this phenomenon can generally be explained
by accounting adjustments, such as divesting from assets over time, which impact the reported
income but not necessarily the cash flow in and out of the company.
FIGURE 6: ANNUAL REVENUE LINE ITEMS AS A SHARE OF RECEIVABLES, 2022 (Y-14+)
37
Credit card issuers generally segment revenue into interest income and non-interest income. Interest income
includes all interest charges accrued and billed on credit card receivables while non-interest income is comprised of
revenue from interchange, penalty fees, transaction fees, and any other income associated with card operations.
38
Interchange income is fees received by the issuer from card associations, part of the merchant discount rate.
39
Private label portfolios have nearly zero interchange income because private label cards operate in a closed loop
system (i.e., are only accepted at the merchant associated with the card), so merchants and networks are generally
not required to pay interchange fees to networks on transactions.
40
Y-14 data dictionary defines other non-interest income as revenue “including annual fees, debt
suspension/cancellation product fees, etc., associated with card operations.”
12.3%
11.1%
7.9%
0.2%
1.5%
3.9%
0.6%
-1.6%
General Purpose Private Label
-2%
0%
2%
4%
6%
8%
10%
12%
Interest Income Interchange Income Fee Income Other Income
23 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Interest income as a share of annualized receivables declined in 2021 due to the decline in
outstanding balances but returned in 2022 alongside the rebound in debt. Declines in 2021 were
more than offset by an increase in interchange revenue, as purchase volume grew in 2021 and
2022. Figure 7 shows that, despite a decline in 2020, interest income remained the primary
revenue source for combined general purpose and private label card portfolios of Y-14+ banks
from 2019 to 2022, followed by interchange income and then fees.
FIGURE 7: ANNUAL REVENUE LINE ITEMS AS A SHARE OF RECEIVABLES (Y-14+)
EXPENSE
Costs associated with rewards and interchange represented issuers’ largest expense category in
2022, exceeding all other non-interest expenses reported in the data.
41
Interchange and rewards
expense has grown over time (Figure 8), as purchase volume has increased and competition in
rewards has escalated.
42
Interest expense moved with changes in the federal funds rate,
decreasing in 2020 and 2021 then increasing in 2022. Overall, the cost of operating a card
portfolio ranged from 10 to 13 percent of managed receivables over the four years studied,
before considering loan loss provisions.
41
The CFPB does not have full insight into what a bank chooses not to report as card-related expenses, but other
operational or marketing budgets may be allocated in other parts of the balance sheet not represented here.
42
Interchange expense represents the fees issuers pay to networks, typically as a flat rate and/or percentage of
purchase volume. Interchange and rewards expense are combined in this section because issuers typically use
interchange revenue to cover the cost of both interchange expense and rewards expense. See Sections 4.5 and 6.1 and
on rewards for more information.
12.7%
11.9%
11.3%
12.1%
5.1%
4.9%
6.6%
6.8%
1.8%
1.6%
1.7%
1.8%
0.2%
0.3%
0.4%
0.3%
2019 2020 2021 2022
0%
2%
4%
6%
8%
10%
12%
14%
Interest Interchange Fees Other income
24 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 8: ANNUAL EXPENSE LINE ITEMS AS A SHARE OF RECEIVABLES (Y-14+)
Loan loss provision expense, reflecting the estimated losses associated with an issuer’s credit
card portfolio, fluctuated in 2020 and 2021 given two concurrent phenomena. First was the
implementation of current expected credit losses (CECL) methodology, an accounting standard
for estimating allowances for credit losses. Before 2020, banks could report credit loss reserves
based on incurred costs, which regulators say often resulted in an underestimation of potential
credit losses.
43
CECL added the requirement that banks incorporate forward-looking
information in determining their estimated provision for credit losses, as well as provisioning
for expected losses over the lifetime of accounts beginning on the date of origination. Second, at
the beginning of the COVID-19 pandemic, issuers increased loan loss provisions in preparation
for an economic downturn. When a widespread recession did not materialize, issuers responded
by rapidly releasing some of their loss provisions. These changes in loan loss provision expense
explain most of the variation in ROA seen in Figure 4.
Expenses differ materially between general purpose and private label card portfolios, as private
label card issuers do not typically fund rewards via interchange income. General purpose card
issuers often spend a significant portion of the interchange revenue they receive on rewards to
cardholders: interchange income less interchange and rewards expenses results in a net
interchange rate of 1.1 percent of average receivables (or 0.3 percent of annual purchase
volume). Therefore, while issuer rewards costs have gone up in recent years, general purpose
card issuers typically earn more in interchange than they spend in the form of rewards they
provide to consumers, irrespective of any additional borrowing and accrued interest the
43
See Office of the Comptroller of the Currency, Current Expected Credit Losses (Apr. 2023),
https://www.occ.treas.gov/news-issuances/bulletins/2023/bulletin-2023-11.html.
2.5%
1.5%
1.0%
2.0%
4.1%
6.4%
-0.8%
2.9%
4.2%
4.0%
5.4%
5.8%
4.9%
4.9%
5.4%
5.1%
2019
2020 2021
2022
-1%
0%
1%
2%
3%
4%
5%
6%
7%
Interest expense Loan loss provision expense
Interchange and rewards expense Other expense
25 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
additional spending may spur. Both general purpose and private label card issuers incur similar
interest expense at roughly 2 percent of receivables.
FIGURE 9: ANNUAL EXPENSE LINE ITEMS AS A SHARE OF RECEIVABLES, 2022 (Y-14+)
2.3 Co-brand partners
Hundreds of millions of U.S. consumers are enrolled in loyalty programs at large merchants,
and almost 74 million of those consumers also accrue rewards at those companies by using co-
branded credit cards.
44
These jointly branded cards are offered, in partnership, by banks issuing
the credit cards; a payment network that processes transactions; and a merchant offering points,
miles, or other rewards to customers. These credit cards are common, with more than one in
three general purpose cards being co-branded in 2021.
45
Responsibilities in each partnership depend on the contract between the financial institution
and its partner. Typically, the partner assists with marketing and account acquisition and the
issuer extends credit and services accounts. Since merchant partners provide issuers access to
an existing base of consumers, who can generate millions of dollars in interchange and interest
44
Major merchants and consumer brands partner with credit card issuers to offer their customers merchant-branded
credit cards. Two types of partnerships include 1) co-branded (or co-brands) that are general purpose credit cards
and transact on a network and 2) private label, which primarily operate with a single retailer. Non-retail
partnerships typically exist between airlines, hotels, or other travel-based businesses and an issuer. For example, an
issuer may offer both co-brand general purpose and private label credit cards in partnership with a major home
improvement chain as part of their retail business. The same company may then partner with a large airline to
provide general purpose cards that feature the partner’s logo and earn rewards in the airline’s miles, separate from
that retail unit.
45
See Packaged Facts, Co-Branded Credit Cards in the U.S., 8
th
Edition (July 2021).
2.0%
1.9%
6.8%
0.0%
2.7%
3.8%
5.0%
5.9%
General Purpose
Private Label
0%
1%
2%
3%
4%
5%
6%
7%
Interest expense Interchange and rewards expense
Loan loss provision expense Other expense
26 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
revenue for the card issuer, these partnerships can be quite lucrative.
46
Winning or renewing a
contract may involve multiple issuers responding to a merchant’s Request for Proposal (RFP)
where banks will compete on offering the best terms for the partner.
47
To compete successfully,
an issuer may offer richer payments to the merchant, which may be funded through higher
interest and fees or lower rewards for consumers.
Payments to partners for rewards like points, miles, or other discounts represent the vast
majority of payments from issuers to merchants in co-brand relationships at 1.53 percent of
purchase volume associated with these large co-brand portfolios. Payments pursuant to revenue
sharing agreements then follow at 0.33 percent. Lastly, payments for the acquisition of new
cards represent 0.14 percent of spending on all co-brand cards.
48
Other payments from an issuer
to a partner include merchant rebates associated with interchange costs; benefits that a bank
funds and then a partner fulfills like baggage fees, companion passes, and free nights;
contractual funds obligated to operational costs like marketing and staffing; and bonuses based
on milestones in card growth. A co-brand partner might pay an issuing bank for reasons like the
provision of promotional-financing or loan repayment. However, these payments from partners
to issuers are limited and represented less than 0.10 percent of co-brand purchase volume in
2022. Both payments to and from issuers have remained fairly stable as a share of purchase
volume since at least 2019. Net of payments from merchants, issuers paid partners an average of
$279 per open account in 2022. For their top co-brand partnerships, major banks made total
net payments to merchant partners in excess of $28 billion in 2022, a 34 percent increase from
2019 levels.
46
During the COVID-19 pandemic, many airlines and hotels relied on the issuers of their co-brand credit cards for
loans and revenue through the sales of points and miles. See e.g. Leslie Josephs and Amelia Lucas, Delta use
frequent-flyer program to back $6.5 billion in debt, CNBC (Sep. 2020), https://www.cnbc.com/2020/09/14/delta-
launches-6point5-billion-debt-deal-backed-by-its-frequent-fl yer-program.html; and Leslie Josephs, Airlines’
frequent flyer programs prove a lifeline even as travelers stay home in pandemic, CNBC (Oct. 2020),
https://www.cnbc.com/2020/10/14/airlines-frequent-flyer-programs-prove-a-lifeline-even-as-travelers-stay-home-
in-pandemic.html.
47
See e.g. Hugh Son, Amazon renews Prime credit card tie-up with JPMorgan Chase after flirting with American
Express, CNBC (Mar. 31, 2022), https://www.cnbc.com/2022/03/31/amazon-prime-amazon-renews-prime-credit-
card-pact-with-jp morgan-after-flirting-with-american-express.html.
48
The findings in this section were gathered through data provided by several mass market issuers on 33 of their top
co-brand card partnerships by 2022 card purchase volume.
27 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 10: PAYMENTS TO MAJOR CO-BRAND PARTNERS AS A SHARE OF PURCHASE VOLUME, 2022
(MMI)
2.4 Networks
Networks connect merchants and credit card issuers by maintaining the flow of funds and
information, often called “the rails,” through which credit card transactions are authorized and
settled. The vast majority of general purpose credit cards in the United States run on the Visa or
Mastercard networks, representing about 85 percent of accounts in 2021.
49
Most of the
remainder are issued on the American Express and Discover networks.
50
These four firms have
remained the dominant card networks for decades.
51
Visa and Mastercard function solely as a network and operate under an “open loop” or “four-
party” model in which each transaction facilitated by the network involves the cardholder,
issuer, merchant, and acquirer (a financial institution that enables a merchant to accept credit
card payments). When a merchant accepts Visa or Mastercard credit cards, they enter into a
contract with an acquirer for payment processing services. The acquirer stands between the
merchant and the network, routing the transaction from the merchant to the network for
49
The Nilson Report, No. 1235.
50
These firms are both issuers and networks; however, at times, other banks issue cards on their networks.
51
In 1950, Diners Club established the first general purpose charge card by first developing relationships with local
restaurants. In the following decade, Bank of America started BankAmericard (which later became independent and
was renamed Visa) and American Express launched its network; in the 1960s, a group of banks began the Interbank
Card Association (later Mastercard). Discover started as a subsidiary of Sears in the 1980s, but became an
independent company in 2007, acquiring Diners Club in 2008.
28 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
authorization, and routing the payment to the merchant.
52
The agreement between the
merchant and acquirer specifies the level of fees for processing transactions, also known as the
merchant discount rate.
53
Transactions on the American Express and Discover networks run on a “closed loop” system
with three parties: the cardholder, the merchant, and one company that both issues the card and
acts as the network. In most cases, American Express and Discover act as the network, issuer,
and acquirer, and they negotiate directly with merchants for the fees assessed on transactions.
54
Importantly, networks set the level of fees—interchange—that make up the majority of the
merchant discount rate. Networks set an interchange schedule which varies based on the type of
transaction, the size of the retailer, and the type of credit card used. Issuing banks receive the
majority of interchange revenue. However, card networks also receive a fee in exchange for
facilitating the transaction using their payment network, oftentimes for including services such
as fraud detection. Overall, networks report consistent net margins near 50 percent.
55
2.5 Debt collectors
Debt collection affects millions of consumers, including many cardholders who face difficulty
repaying their credit card debts. As of the first quarter of 2022, nearly one-quarter of all
consumers’ credit reports (23.5 percent) had at least one collection tradeline.
56
Medical debt
made up over half those tradelines in third-party collections, as shown in Figure 11. In contrast,
only 13 percent of debt collection tradelines on consumer credit reports were for banking or
financial debts (including credit cards). In 2022, 287 unique furnishers reported banking and
52
The U.S. acquirer market has seen high levels of consolidation in the past few years, and the handful of major
players represent the vast majority of market share as a percentage of both payment volume and transactions. See
The Nilson Report, No. 1218.
53
Most of the merchant discount fee is interchange paid from the acquirer to an issuer through a network, but the
acquiring institution retains the balance of the merchant discount fee. If a merchant becomes bankrupt or otherwise
cannot fulfill the promise of goods, the acquirer assumes the risk; likewise, acquirers play a large role in resolving
disputes and chargebacks.
54
For exceptions, see The U.S. Government Accountability Office, Credit Cards – Rising Interchange Fees Have
Increased Costs for Merchants, but Options for Reducing Fees Pose Challenges, (Nov. 2009),
https://www.gao.gov/assets/gao-10-45.pdf, at 9.
55
See The Economist, Can the Visa-Mastercard duopoly be broken?, (Aug. 2022),
https://www.economist.com/finance-and-economics/2022/08/17/can-the-visa-mastercard-duopoly-be-broken.
56
CFPB, Market Snapshot: An Update on Third-Party Debt Collections Tradelines Reporting, (Feb. 2023),
https://files.consumerfinance.gov/f/documents/cfpb_market-snapshot-third-party-debt-collections-tradelines-
reporting_2023-02.pdf.
29 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
financial debt collection tradelines, including credit card collections tradelines. The top four
furnishers of banking and financial collections tradelines reported 82 percent of these
tradelines.
57
However, a credit card in collections sometimes may not appear on consumer
credit reports as a debt collection tradeline. In one survey, 44 percent of consumers with debts
in collection reported having at least one credit card debt in collections.
58
FIGURE 11: DISTRIBUTION OF ORIGINAL CREDITOR TYPE AMONG THIRD-PARTY COLLECTIONS
TRADELINES, 2022 (CCP)
59
Over the past four years, debt collection industry revenue has grown. It rose from $12.7 billion
in 2019 to $18.2 billion in 2020,
60
even with Federal and state measures restricting collections
actions during the COVID-19 pandemic, such as a federal eviction moratorium and state laws
restricting call frequencies, litigation, and garnishments. In 2021 and 2022, debt collection
industry revenue continued its upward trend, reaching $20.3 billion in 2022, as agencies
benefitted from consumers paying down existing balances.
61
A significant majority of the industry’s revenue is generated by firms contracting with creditors
and debt buyers to collect their debts on a contingency fee basis. In contingency collections, the
collector receives a share of the amount collected as a commission. A significant source of
industry revenue comes from debt buyers, who purchase accounts (usually contained in
portfolios) from the original creditor or other debt buyers and then generally seek to collect on
57
Id.
58
CFPB, Consumer Experiences with Debt Collections: Findings from the CFPB’s Survey of Consumer Views on
Debt, (Jan. 2017), https://www.consumerfinance.gov/data-research/research-reports/consumer-experiences-debt-
collection-findings-cfpbs-survey-consumer-views-d eb t/.
59
Market Snapshot, supra note 56.
60
See Tina Fine, Debt Collection Agencies in the US, IBISWorld (Jan. 2023).
61
Id.
57% 13% 11% 8% 4% 4%
3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Medical Banking and financial Telecommunications Retail Other Utilities Rental or leasing
30 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
the debt, either by themselves or through third-party debt collectors. Most credit card debt
collections tradelines are reported by debt buyers, and as of 2022, debt buyers furnished 17
percent of total third-party collections tradelines.
62
This share has increased by almost 50
percent since 2018. In contrast, collectors that collect on behalf of creditors reported 38 percent
fewer collections tradelines over this period.
63
Total employment by debt collectors has recently increased, even as the credit card debt
collection market has grown more concentrated. After years of decline, employment in the third-
party debt collection industry rose from 130,000 in 2019 to roughly 138,000 U.S. workers in
2022.
64
However, the industry continues to consolidate, with the number of debt collection
enterprises declining by 28 percent and the number of debt collection establishments declining
by 26 percent from 2014 to 2022.
65
Major issuers surveyed reported using 30 unique third-party
debt collection agencies in 2022, down significantly from 55 unique agencies in 2020.
66
The
number of debt buyers utilized by these issuers decreased slightly to 15 unique buyers in 2022
from 17 unique buyers in 2020.
62
CCP.
63
Id.
64
See Debt Collection Agencies in the US, supra note 60.
65
Id.
66
MMI.
31 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
3. Use of credit
This chapter reviews several measures of consumers’ use and repayment of credit cards. First,
this section describes the size of the market by spending and debt levels. In terms of purchase
volume and nominal debt levels, the credit card market has never been so large. By other
indicators such as inflation-adjusted total balances and average debt per cardholder, the market
has just returned to highs last seen in late 2019. Second, this section looks at repayment through
total payments, payment rates, and revolving behavior. Last, this section reports on non-
payment by examining delinquency and charge-off rates. Many of these indicators point toward
consumers’ increased ability to make larger and more timely payments on their outstanding
credit card balances in 2020 and 2021. While measures like revolving and delinquency rates
increased in 2022, they remained below pre-pandemic norms.
3.1 Purchase volume
Credit card purchases reached new highs following a pullback during the first year of the
COVID-19 pandemic. Total purchase volume for Y-14+ issuers in 2022 was $3.2 trillion, a 48
percent increase from 2020 levels. Purchase volume exceeded its pre-pandemic level starting in
the second quarter of 2021 and continued to grow following a seasonal pattern, even after
adjusting for inflation, as shown in Figure 1.
FIGURE 1: QUARTERLY PURCHASE VOLUME, NOMINAL AND INFLATION-ADJUSTED (Y-14+)
Most of the increase in spending was on general purpose card accounts, as private label card
purchases remained relatively low. General purpose card purchase volume for issuers in the
CFPB’s sample increased to $3 trillion in 2022, 50 percent higher than in 2020. In contrast,
private label card spending is much lower at $180 billion in 2022 and has remained relatively
$440B
$484B
$530B
$578B
$614B
$597B
$763B
$846B
$554B
$597B
$641B
$686B
$712B
$683B
$812B
2015 2016 2017 2018 2019 2020 2021 2022
$0
$200B
$400B
$600B
$800B
Purchase volume (nominal) Purchase volume (real)
32 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
flat since at least 2015, such that private label card spending represents a declining share of
overall card purchase volume.
FIGURE 2: QUARTERLY PURCHASE VOLUME (Y-14+)
Consumers with higher credit scores generally spend more on their cards. Average general
purpose purchase volume per account ranged from about $1,100 annually for cardholders with
deep subprime scores to $10,700 and $12,600 for cardholders with prime plus and superprime
scores, respectively. Private label purchase volumes followed a similar trend, with the exception
of superprime cardholders, who spent less on such cards than cardholders with scores between
660 and 800.
FIGURE 3: ANNUAL AVERAGE PURCHASE VOLUME PER ACCOUNT, 2022 (Y-14+)
$397B
$440B
$487B
$532B
$568B
$554B
$714B
$796B
$43B
$44B
$44B
$46B
$45B
$43B
$49B
$50B
2015 2016
2017 2018
2019 2020 2021 2022
$0
$200B
$400B
$600B
$800B
General purpose Private label
$1,109
$325
$2,051
$680
$3,338
$1,019
$5,910
$1,360
$10,697
$1,652
$12,634
$1,333
$8,823
$1,286
General purpose Private label
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
33 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
3.2 Debt levels
Consumer credit card debt, which had been increasing every year since 2011, suddenly reversed
course following the onset of the pandemic but has since resumed steady growth. Credit card
debt peaked in late 2019 at $960 billion, and by the first quarter of 2021, consumers had
reduced card balances to $784 billion. However, by the end of 2022, debt surpassed $1 trillion.
67
For major credit card issuers, 82 percent of total debt is revolving; the remaining share is repaid
by the statement due date.
68
While nominal debt levels rose in 2022, credit card debt at the end
of that year was comparable to 2017 levels when adjusted for inflation, as shown in Figure 4,
even as the number of cardholders has continued to rise.
69
FIGURE 4: QUARTERLY CYCLE-ENDING BALANCES, NOMINAL AND INFLATION-ADJUSTED (CCP)
Average debt per cardholder in 2022 returned to pre-pandemic levels following a decline in
2020 and 2021. The average cardholder carried $5,288 in total credit card debt across general
purpose and private label cards at the end of 2022. This was a 24 percent increase from 2021
lows and marked a return to late-2019 levels. Average balances increased for cardholders in all
credit score tiers in 2022 to end roughly in line with each tier’s average balance from late-2019.
67
Other government agencies may use different data providers or methodologies for estimating total debt. For
example, the Federal Reserve Bank of New York reported credit card balances of $986 billion in the fourth quarter of
2022, see Fed. Rsrv. Bank of New York, Quarterly Report on Household Debt and Credit 2022: Q4 (Feb. 2023),
https://www.newyork fed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2022Q4.
68
Y-14+. Some amount of debt is incurred and subsequently repaid without appearing on a statement, which is
unobservable and therefore not included in this calculation.
69
We reported 181 million cardholders at year-end 2020. See Section 1; 2021 Report, supra note 3, at 25.
$707B
$745B
$783B
$841B
$887B
$921B
$960B
$842B
$880B
$904B
$946B
$987B
$1,038B
$1,073B $1,093B $1,113B
$964B
$937B
$1,022B
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$0
$200B
$400B
$600B
$800B
$1,000B
CCP credit card balances (nominal) CCP credit card balances (real)
34 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Cardholders with prime scores remain the most indebted, with average balances reaching
$9,135 at the end of 2022.
FIGURE 5: QUARTERLY AVERAGE PER-CARDHOLDER CYCLE-ENDING BALANCES (CCP)
Growth in debt carried on general purpose cards primarily drove the rise in credit card balances
during 2022, while private label balances remained relatively low. General purpose credit card
debt declined sharply in 2020, reversing a long-term trend of rising balances. By the fourth
quarter of 2022, however, general purpose credit card debt rebounded to $935 billion, above the
$867 billion mark reached in the fourth quarter of 2019. The total dollar value and market share
of private label balances remain roughly one tenth of those on general purpose card accounts.
Following a ten percent decline in 2020 and no change in 2021, private label credit card debt
grew somewhat in 2022 but remained below nominal pre-pandemic levels at $87 billion in the
fourth quarter of 2022.
$4,453
$4,593
$4,668
$4,885
$5,048
$5,173
$5,292
$4,594
$4,630
$5,288
$0
$2,000
$4,000
$6,000
$8,000
2013 2014
2015 2016
2017 2018 2019 2020 2021 2022
Deep subprime Subprime Near-prime Prime
Prime plus Superprime Overall
35 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 6: QUARTERLY CYCLE-ENDING BALANCES (CCP)
Average balances per account are higher for general purpose cards than private label cards, with
a wide range of values across credit scores. In 2022, average cycle-ending balances were $1,727
per general purpose account and $440 per private label account. As shown in Figure 7, average
general purpose card balances are highest for cardholders with prime credit scores at $2,588 per
general purpose card account, and lowest for those with superprime scores at $855 per general
purpose card account. Prime plus cardholders average noticeably higher balances than
superprime cardholders despite lower spending, given differences in payment rates. Private
label balances tend to be much lower and demonstrate less differentiation by credit score tier
than general purpose cards, but prime plus and superprime balances remain lower than average
balances for private label cards in other score tiers at $391 and $156 per private label card,
respectively.
FIGURE 7: AVERAGE PER-ACCOUNT CYCLE-ENDING BALANCES, END OF YEAR 2022 (CCP)
$636B
$669B
$695B
$748B
$792B
$828B
$867B
$760B
$799B
$935B
$70B
$77B
$88B
$93B
$95B
$93B
$92B
$82B
$82B
$87B
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$0
$200B
$400B
$600B
$800B
$1,000B
General purpose Private label
$1,369
$599
$1,544
$548
$1,960
$607
$2,588
$648
$1,921
$391
$855
$156
$1,727
$440
General purpose Private label
$0
$500
$1,000
$1,500
$2,000
$2,500
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
36 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
3.3 Repayment
3.3.1 Payments
Consumers are making larger credit card payments than ever before. In 2022, consumers paid a
record $3.2 trillion for credit card debts, roughly equal to total purchase volume that year.
70
Repayment has risen steadily following a dip in the first quarter of 2020 and has now surpassed
pre-pandemic levels on an inflation-adjusted basis, as shown in Figure 8.
FIGURE 8: QUARTERLY PAYMENTS, NOMINAL AND INFLATION-ADJUSTED (Y-14+)
General purpose cardholders paid a much greater share of balances in 2021 and 2022 than they
did historically, while consumers continued to repay debt on private label cards at typical rates.
Payment rates provide an additional measure of consumer reliance on credit cards as a source of
credit.
71
The payment rate is the share of total cycle-beginning balances paid that cycle.
72
General purpose card repayment averaged 40 percent of balances in 2021 and 2022, up from
pre-pandemic figures of roughly 30 percent. Private label payment rates remained in line with
historical averages of 12 to 15 percent of balances.
70
See Section 3.1 for more information regarding purchase volume.
71
Payment measures cannot be shown at the consumer level because the CCP does not contain payment data. The Y-
14+ is used instead for these views.
72
A payment rate of 100 percent corresponds to all cycle beginning account balances being paid in full, and a payment
rate of zero percent indicates that no cardholders are paying any of a credit card bill, even in part. Consumers can
have a payment rate greater than 100 percent where they pay off new purchases prior to the end of the billing cycle
in addition to paying off existing balances.
$444B
$486B
$534B
$585B
$626B
$610B
$748B
$833B
$560B
$600B
$646B
$694B
$726B
$699B
$796B
2015 2016 2017 2018 2019 2020 2021 2022
$0
$200B
$400B
$600B
$800B
Payments (nominal) Payments (real)
37 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 9: QUARTERLY CREDIT CARD PAYMENT RATES (Y-14+)
Payment rates increase with cardholder credit scores and tend to be higher on general purpose
cards than private label ones. Credit scoring models' use of utilization, or balances as a share of
available credit line,
73
partly explains the positive relationship between scores and payment
rates: higher payment rates tend to reduce revolving debt, lower utilization, and increase scores.
As shown in Figure 10, cardholders with prime and below scores made payments equal to less
than one fifth of their balances in 2022, with lower payment rates for cardholders with lower
scores and users of private label cards. However, there is differentiation even between
cardholders with above-prime scores. General purpose cardholders with scores above 800 repay
roughly the entire balance on their cards each month compared to less than half of the balance
for those with scores from 720 to 799. Superprime private label cardholders show nearly twice
the payment rate of prime plus. One explanation for lower private label payment rates may be
the prevalence of deferred interest promotions, which incentivize consumers to pay less than the
full balance until the promotion nears expiry.
73
Ficoscore.com, Frequently Asked Questions About FICO® Scores, (2022),
https://www.ficoscore.com/ficoscore/pdf/Frequently-Ask ed-Questions-About-FICO-Scores.pdf.
27.4%
27.9%
29.0%
30.5%
31.5%
34.8%
41.9%
39.1%
14.0%
13.4%
12.7%
12.4%
12.6%
13.4%
14.4%
13.2%
2015 2016 2017 2018 2019 2020 2021 2022
0%
10%
20%
30%
40%
50%
General purpose Private label
38 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 10: PAYMENT RATE, 2022 (Y-14+)
While the share of cardholders who pay the total balance on their cards each month has risen,
one third continue to pay less than 10 percent of their balance in a given cycle. More than two-
fifths of accountholders with a balance pay their balances in full, up two percentage points from
our last report. Roughly one-third pay less than 10 percent of their balances, a figure that has
declined six percentage points since 2019. Figure 11 further shows that 23 percent pay between
10 percent and 100 percent of their balances in a typical month, roughly in line with the
historical average. Consumers tend to display consistent transacting and revolving activity over
time, which makes the shifts in repayment behavior observed in recent years particularly
notable. One explanation may be improving financial conditions for some cardholders, perhaps
due to pandemic-era stimulus policies.
74
74
For more information regarding financial conditions for consumers during the pandemic, see Scott Fulford, The
Pandemic Paradox: How the COVID Crisis Made Americans More Financially Secure, (2023), Princeton University
Press.
10%
6%
13%
9%
14%
9%
18%
11%
43%
16%
103%
31%
41%
14%
General purpose Private label
0%
20%
40%
60%
80%
100%
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
39 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 11: ANNUAL SHARE OF ACCOUNTS BY PAYMENT AMOUNT (Y-14)
3.3.2 Minimum payment
Paying only the minimum payment due each month can greatly increase the total cost and
duration of credit card debt; as such, the CARD Act mandated including the cost of making only
the minimum payment on monthly billing statements.
75
However, as discussed in Section 6.7.1,
more consumers are making payments exclusively online or through automatic payments, and
consequently they may not have an opportunity to review mandatory disclosures.
76
For many
consumers relying solely on digital portals, the calculation behind their minimum payments due
and the consequences of repeatedly making only the minimum payment may not be apparent.
About 13 percent of general purpose and 17 percent of private label accounts pay only the
minimum payment due each month.
77
Cardholders with subprime scores are more likely to
make exactly the minimum payment than those with higher scores who often pay more than the
minimum. Cardholders with deep subprime credit scores have higher rates of delinquency and
at times may pay nothing at all. As shown in Figure 12, for general purpose cards, over 20
percent of cardholders with below-prime scores pay only the minimum payment due each
month, while less than 10 percent of cardholders with prime plus and superprime scores pay
only the minimum payment due. For private label cards, over 20 percent of consumers with
75
12 CFR 1026.7(b)(12).
76
See Comment Letter CFPB-2023-0009-0090.
77
The minimum payment due is defined as the total amount which a consumer must pay to avoid delinquency and
typically includes any amount past due and the dollar value of the minimum payment calculation described in this
Section. For the purposes of this report, making the minimum payment includes accounts with an actual payment
amount in a given cycle between this amount and the next dollar, rounding-up. It excludes accounts with a
minimum payment of zero but includes those where the minimum payment equals the cycle beginning balance.
41%
41%
41%
40%
39%
36%
32%
33%
23%
23%
23%
21%
21%
21%
22%
23%
36%
36%
36%
39%
40%
42%
46%
44%
0%
20%
40%
60%
80%
100%
2015 2016 2017 2018 2019 2020 2021 2022
Less than 10% of total balance At least 10% but less than total balance Total balance
40 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
below-prime scores pay only the minimum payment due, while this number drops to under 15
percent for consumers with prime plus or superprime scores.
FIGURE 12: SHARE OF ACCOUNTS MAKING JUST THE MINIMUM PAYMENT DUE, 2022 (Y-14+)
Generally, issuer minimum payment calculations include multiple conditionalities that,
together, determine how much an account holder must pay to avoid late fees.
78
Most minimum
payment calculations stipulate that consumers will pay the highest of two or three options, a
numerical floor, or a percentage of the cycle-ending balance plus interest and fees, such as “$35
or three percent of the balance, whichever is higher.” Of those with publicly available
information on the process for calculating minimum payments, all issuers set fixed floors on the
dollar value of minimum payments. These floors varied from $20 to $41, if greater than the total
balance, at the time of review in 2023: the most common floor was $35—a $10 increase since
2015.
79
All issuers included in this analysis calculated the minimum payment as a percentage of
the total statement balance, with costs added separately. Most issuers set minimum payment at
one percent of the balance, with at least one as high as three percent. Issuers typically add the
sum of finance charges, fees, and past due amounts onto this percent of the cycle-ending balance
to arrive at the minimum payment. Most issuers explicitly disclosed that minimum payments
would not exceed the cycle-ending balance, or the new balance as of the statement date.
Minimum payment policies vary across issuers, across cards by the same issuer, and even across
cardholders with different measures of issuer-defined creditworthiness with the same card.
Issuers sometimes tie minimum payment amounts to a consumer’s repayment history, for
78
15 out of 18 credit card issuers analyzed describe their minimum payment calculations in their publicly-available
agreements; two instead referred cardholders to their monthly statement or account opening disclosure for that
information.
79
2015 Report, at 130.
23%
24%
26%
31%
24%
29%
19%
22%
9%
13%
5%
7%
13%
17%
General purpose
Private label
0%
5%
10%
15%
20%
25%
30%
Deep subprime Subprime
Near-prime
Prime Prime plus
Superprime
Overall
41 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
example automatically increasing the minimum payment amount floor if the consumer has at
least one missed payment in the previous six billing cycles.
80
While minimum payments that
represent a higher share of the total balance may help some cardholders pay less in finance
charges over time, this higher minimum payment may cause some cardholders to change their
likelihood of borrowing and for others to incur late fees, risk delinquency, and hurt their credit
scores.
81
The value of the average minimum payment for revolving accounts in 2022 was $102 for general
purpose cards and $69 for private label cards. The average minimum payment has increased
both overall and for all credit tiers from 2021 levels of $94 for general purpose cards and $66 for
private label cards. Much of the increase for consumers with prime, prime plus, and superprime
scores is due to growing balances and associated finance charges. However, a large share of the
increase in the monthly payment burden for consumers with subprime and deep subprime
scores is indicative of increasing delinquency rates, as total minimum payments due typically
require the payment of any amount past due and assessed late fees. As shown in Figure 13, the
average minimum payment due was higher for consumers with deep subprime scores than for
all other tiers but prime. More notably, for private label cards in 2022, the average minimum
payment due for consumers with deep subprime scores was $43 and $54 higher than for
consumers with prime plus and superprime scores, respectively.
FIGURE 13: AVERAGE MINIMUM PAYMENT DUE, REVOLVING ACCOUNTS, 2022 (Y-14+)
80
CFPB, Credit Card Penalty Fees (Regulation Z) Proposed Rule, (Feb. 1, 2023),
https://www.consumerfinance.gov/rules-policy/rules-under-development/credit-card-penalty-fees-regulation-z/.
81
Brookings, Revolving debt’s challenge to financial health and one way to help consumers pay it off, (June 7,
2022), https://www.brookings.edu/research/revolving-debts-challenge-to-financial-health-and-one-way-to-help-
consumers-pay-it-off/.
$118
$110
$82
$65
$93
$63
$118
$67
$112
$67
$63
$56
$102
$69
General purpose Private label
$0
$20
$40
$60
$80
$100
$120
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
42 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
For revolving cardholders, the minimum payment as a share of cycle-ending balances was
higher for consumers with lower scores. Minimum payments accounted for, on average, three
percent of revolving credit card debt each month for general purpose cards from 2015 to 2022;
however, only a portion of these payments goes to repaying the principal balance. In most cases,
issuers apply the minimum payment to the accrued interest, fees, and any delinquent balances
first, and then they apply what is left over to the remaining statement balance.
82
For cardholders
with subprime and deep subprime scores, who tend to have smaller balances than those in
higher credit tiers, their minimum payments represented a larger percentage, five and nine
percent, respectively, of revolving credit card debt in 2022. For private label cards, minimum
payments accounted for five percent of overall credit card debt in 2021 and 2022 and reached 12
percent for accountholders with deep subprime scores.
3.3.3 Revolving rate
Over the past two years, the share of active accounts that revolved a balance from one month to
the next (“revolving rate”) has gradually risen to near pre-pandemic levels.
83
The share of
accounts where cardholders pay less than the statement balance on a general purpose card has
risen steadily since its low point of 43 percent in the second quarter of 2021, reaching 48 percent
in the fourth quarter of 2022. In 2019, the share of general purpose accounts revolving a balance
ranged from 49 to 51 percent. Private label cardholders exhibited a similar but less-pronounced
trend, with slightly higher revolving rates for active accounts in 2022 at roughly 54 percent,
equal to the share observed in 2019. The higher share of revolving for private label cards may be
due to some cardholders taking advantage of zero-interest or deferred-interest promotions,
which are more common on this type of card.
82
The minimum payment itself can be applied to the issuers’ choice of balances. Amounts in excess of the minimum
payment must be applied to balances with the highest APR. See 12 CFR 1026.53.
83
The methodology for calculating share of accounts revolving has changed from when the CFPB reported on this in
2021. In this report, “Revolving” accounts continue to be defined as having a cycle beginning balance larger than the
sum of payments in each monthly cycle, but the denominator now includes all open and active accounts. Discretion
is advised in comparing reported revolve rates to figures from prior reports, as the change in methodology results in
a lower reported share of active accounts revolving but does not indicate a significant change in consumer card
balance revolving practices.
43 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 14: QUARTERLY SHARE OF ACTIVE ACCOUNTS REVOLVING (Y-14+)
Cardholders in all credit score tiers reduced revolving rates during the pandemic but have
steadily returned to pre-pandemic levels since around the time of the last economic stimulus
payment in the second quarter of 2021. Revolving rates began to fall starting in the second
quarter of 2020 and continued to fall for one year before gradually rising toward pre-pandemic
levels. Given the timing, this trend likely reflects the impact of government financial relief
enacted to offset the financial hardship imposed by COVID-19 and reduced consumer spending,
and the impact of the end of those two trends. For reference, the most recent Economic Impact
Payment was issued in March 2021, right around the time general purpose revolving rates fell to
their lowest point in recent years.
84
Since broader pandemic relief measures such as enhanced
unemployment payments alongside eviction and foreclosure moratoriums expired, and
consumer spending returned to previous levels, general purpose cardholders in all credit score
tiers have gradually returned to pre-pandemic revolving rates, with about half of accounts
carrying a balance from month to month.
84
Pandemic Oversight, Update: Three rounds of stimulus checks. See how many went out and for how much., (last
updated Feb. 9, 2023), https://www.pandemicoversight.gov/news/articles/update-three-rounds-stimulus-checks-
see-how-many-went-out-and-how-much.
50%
46%
45%
48%
54% 54%
52%
54%
2019 2020 2021 2022
0%
10%
20%
30%
40%
50%
60%
General purpose Private label
44 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 15: QUARTERLY SHARE OF ACTIVE ACCOUNTS REVOLVING, GENERAL PURPOSE (Y-14+)
Balance carrying behavior by cardholders is highly correlated with credit score and was similar
across general purpose and private label cards, but this report also finds that prime plus
cardholders are more than twice as likely to carry a balance than superprime cardholders. While
the category “superprime” previously included cardholders with any credit score above 720, in
this report we split the category into “prime plus” at 720 to 799 and “superprime” at 800 plus,
which has enabled us to illustrate differences in card usage among groups of cardholders
sometimes considered quite similar in behavior. In Section 3.2, we noted that prime plus
cardholders average noticeably higher cycle-ending balances than superprime cardholders. Card
revolving behavior is also dissimilar between the two groups, as shown in Figure 16. This
difference holds for both general purpose and private label accounts.
FIGURE 16: SHARE OF ACTIVE ACCOUNTS REVOLVING, 2022 (Y-14+)
Surveys conducted in 2021 showed that consumer-level revolving was low relative to prior years.
While the CFPB can only quantify the share of revolving accounts, the Survey and Diary of
Consumer Payment Choice can estimate the share of consumers who revolve. At the time of that
51%
51%
50%
49%
50%
46%
45%
48%
2015 2016 2017 2018 2019 2020 2021 2022
0%
20%
40%
60%
80%
100%
Deep subprime Subprime Near-prime
Prime Superprime and prime plus Overall
86%
88%
80%
81%
78%
77%
69%
68%
41%
48%
20%
22%
47%
54%
General purpose Private label
0%
20%
40%
60%
80%
100%
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
45 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
survey in October 2021, 45.7 percent of consumers with a credit card reported carrying a
balance at some point in the last 12 months, down more than five percentage points from 2020,
while 41.6 percent reported carrying a balance within the last month, up one percentage point
from 2020.
85
Federal Reserve Board data from the annual Survey of Household Economics and
Decisionmaking (SHED) support this conclusion, with 48 percent of survey cardholders in 2021
reporting that they never carried an unpaid balance during the preceding 12 months, unchanged
from 2020 levels.
86
3.4 Non-payment
3.4.1 Delinquency
Credit card delinquency has been rising since the expiration of COVID-19 related financial relief.
Continuing high inflation and interest rates may exacerbate this trend.
87
The share of balances
60 or more days delinquent reached a post-Great Recession high point around the first quarter
of 2020 for general purpose and private label cards at 2.4 percent and 4.4 percent,
respectively.
88
During the ensuing two years of the pandemic, delinquency rates for both card
types declined to their lowest point in mid-to-late 2021, marking the lowest share of delinquent
85
See Fed. Rsrv. Bank of Atlanta, 2021 SDCPC Tables (Jan. 2022), https://www.atlantafed.org/-
/media/documents/banking/consumer-payments/survey-diary-consumer-payment-
choice/2021/tables_dcpc2021.pdf.
86
See Bd. Of Governors for the Fed. Rsrv. Sys., Report on the Economic Well-Being of U.S. Households in 2021, at 49
(May 2022), https://www.federalreserve.gov/publications/files/2021-report-economic-well-being-us-households-
202205.pdf. See also Bd. Of Governors for the Fed. Rsrv. Sys., Report on the Economic Well-Being of U.S.
Households in 2020, at 42 (May 2021), https://www.federalreserve.gov/publications/files/2020-report-economic-
well-being-us-households-202105.pdf.
87
Commenters to the CFPB’s RFI and public press note the trend of increasing delinquency. One RFI commenter
wrote that they expect that “as interest rates and prices remain high, credit card balances and delinquency will
continue to go up” with lasting effects on consumer well-being. This commenter suggested the CFPB “continue to
research how it can influence lowering credit card balances and delinquency reduction, including more regulation on
interest rates and credit limits and promoting financial education.” See New York City Department of Consumer and
Worker Protection Comment Letter, at 3. Another RFI industry commenter wrote “Since June 2021, credit cards
have seen increasing delinquency at RBFCU. As of August 2022, this has stabilized for our credit union…” See
Randolph-Brooks Federal Credit Union Comment Letter, at 2.
88
When a consumer fails to make a required minimum payment by the due date, the credit card account becomes
“delinquent.” Delinquency rates are calculated as the share of accounts or balances in a given delinquency status
grouping based on the number of days past the due date, each associated with different consequences for a
cardholder like late fees after one day, negative credit score impacts after 30 days, penalty pricing after 60 days, etc.
We rely on 60 plus day delinquency here, as in previous reports. Because credit scores are heavily influenced by
delinquency and charge-offs, these measures are not shown by credit score tiers.
46 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
balances observed in our data.
89
Since the final Economic Impact Payment was issued in the
second quarter of 2021, delinquent balances have crept back up and now approach pre-
pandemic levels. As of the fourth quarter of 2022, 2.1 percent of general purpose card balances
and 3.6 percent of private label card balances were 60 or more days delinquent. Recent data
from the New York Federal Reserve show that 90+ day credit card delinquency transitions are
rising for younger borrowers, many of whom will soon be required to begin repaying student
loan debt once the more than three-year pause on repayment ends.
90
FIGURE 17: QUARTERLY SHARE OF BALANCES 60 OR MORE DAYS DELINQUENT (CCP)
89
See 2021 Report, supra note 3, at 43. Other measures of consumer delinquency like the Federal Reserve Board’s
“Charge-Off and Delinquency Rates on Loans and Leases at Commercial Banks” suggest it reached its lowest level
since at least 1991, see https://www.federalreserve.gov/releases/chargeoff/delallnsa.htm (last accessed June 7,
2023).
90
See Fed. Rsrv. Bank of New York, Quarterly Report on Household Debt and Credit 2023: Q1 (May 2023),
https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q1. The Wall
Street Journal reported that “The expected restart of student-loan repayments…could add to pressure on younger
borrowers, who are already falling behind on debt in an era of high inflation and rising interest rates…” Gabriel T.
Rubin and Gwynn Guilford, Student-Loan Bills Are Set to Come Due, Adding Pressure on Younger Americans, Wall
St. J. (Mar. 11, 2023), https://www.wsj.com/articles/student-loan-bills-are-set-to-come-due-adding-pressure-on-
younger-americans-1738b6e0. See also Joe Pinsker, Americans Are Falling Behind on Their Bills, Wall St. J. (May
16, 2023), https://www.wsj.com/articles/credit-card-car-debt-payments-behind-decc1a22. See also Thomas
Conkling and Christa Gibbs, Office of Research blog: Update on student loan borrowers as payment suspension set
to expire, CFPB (June 7, 2023), https://www.consumerfinance.gov/about-us/blog/office-of-research-blog-update-
on-student-loan-borrowers-as-payment-suspension-set-to-expire/.
1.9%
1.8%
1.8%
2.0%
2.1%
2.3%
2.4%
1.8%
1.4%
2.1%
3.3%
3.1%
3.1%
3.6%
3.9%
4.1%
4.4%
3.1%
2.6%
3.6%
2013 2014 2015 2016 2017 2018 2019 2020
2021
2022
0%
1%
2%
3%
4%
5%
General purpose Private label
47 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
3.4.2 Charge-off
Charged-off balances have begun to rise, following a decline during the pandemic, similar to
delinquency trends.
91
General purpose charge-offs remained roughly consistent at around six
percent of total balances annualized until mid-2020, declined to less than three percent by mid-
2021, and then moderated to 4.3 percent by the fourth quarter of 2022. Private label charge-offs
fell throughout 2020 and 2021 to 4.5 percent. Since mid-2021, private label charge-offs have
risen to 7.7 percent but remain below their 2013 to 2019 average of around 10 percent. Similar
to delinquency patterns, charge-off rates indicate many cardholders were able to avoid
defaulting on their credit card debt during the pandemic. Some of this reduction in charged-offs
balances may be due to pandemic-related support measures such as the enhanced
unemployment insurance program, temporary forbearance programs, eviction moratoriums,
and Economic Impact Payments.
92
Other potential explanatory factors may include rising wages
and a strong labor market.
93
FIGURE 18: QUARTERLY ANNUALIZED RATE OF GROSS OUTSTANDING BALANCES CHARGED OFF (CCP)
91
Accounts that remain delinquent for 180 days must be “charged off,” meaning that the issuer can no longer consider
the outstanding balance as an asset on its balance sheet. Delinquent accounts may have to be charged off prior to 180
days in certain circumstances as, for example, with a bankruptcy. See Off. of the Comptroller of the Currency, Policy
Implementation – The Guidance Attached to this Bulletin Continues to Apply to Federal Savings Associations, OCC
Bulletin 2000-20 (June 20, 2000), https://occ.gov/news-issuances/bulletins/2000/bulletin-2000-20.html.
92
For more information regarding financial conditions for consumers during the pandemic, see Scott Fulford, The
Pandemic Paradox: How the COVID Crisis Made Americans More Financially Secure, (2023), Princeton University
Press.
93
The White House, The Labor Supply Rebound from the Pandemic, (Apr. 17, 2023),
https://www.whitehouse.gov/cea/written-materials/2023/04/17/the-labor-supply-rebound-from-the-pandemic/.
4.0%
4.0%
3.8%
4.6%
5.2%
5.9%
6.3%
3.6%
2.9%
4.3%
9.3%
9.5%
10.1%
10.5%
9.2%
10.9%
8.4%
5.0%
4.5%
7.7%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0%
3%
6%
9%
12%
15%
General purpose Private label
48 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
4. Cost of credit
This report assesses the costs of credit cards to cardholders using the CFPB’s total cost of credit
(TCC) measure.
94
First, we examine overall TCC as an annualized percentage of total debt over
time. Next, we calculate costs both as a share of cycle-ending balances for revolving accounts
and as a share of annual purchase volume for transacting accounts.
95
This section then looks
separately at the main components of TCC—interest and fees. Building on the work of its
predecessors, this report attempts to further quantify the costs and benefits of credit cards using
a new measure: net cost of credit (NCC). NCC supplements TCC by subtracting the dollar value
of rewards earned from credit costs as a share of either balances (for revolving accounts) or
purchase volume (for transacting accounts).
96
Finally, we estimate the number of accounts in
persistent debt, namely, cardholders whose annual costs on a credit card exceed the value of
principal payments.
97
This section focuses primarily on the costs to revolving cardholders compared to the benefits
largely reaped by those who transact. Cardholders who revolve debt from one cycle to the next
pay almost all interest charged, and three-fourths of total fees assessed, but earn less than 30
percent of the dollar value of earned rewards. Interchange fees generate enough revenue for
issuers to cover the costs of points, miles, and cash back for both revolving and transacting
94
The TCC measure was initially introduced in the 2013 Report and has since been used in the 2015 Report, 2017
Report, 2019 Report, and 2021 Report. See 2013 Report, supra note 3, at 19; 2015 Report, supra note 3, at 76; 2017
Report, supra note 3, at 72; 2019 Report, supra note 3, at 55; 2021 Report, supra note 3, at 47.
95
Cost data are from the Y-14 data, augmented by summary data that the CFPB collected from a range of issuers not
included in that source. Y-14 data do not permit consumer-level cost reporting. For more detail on Y-14 data, see
Section 1.2. Although this report uses broader cost data than previous iterations did, the CFPB does not claim that
these data are representative of the market not covered by the data. Previously, transacting accounts included those
with actual payments greater than a non-zero cycle beginning balance—for this report, we further limit transacting
accounts to those with non-zero, non-negative cycle beginning balances.
96
Consumers primarily earn rewards on cards that transact on a network and earn interchange revenue for the
issuing bank. The CFPB’s findings on NCC apply to general purpose cards offered by mass market issuers.
These
findings are based on the MMI sample, and therefore may not generalize for smaller banks, credit unions, private
label issuers, or issuers of cards primarily targeted toward consumers with subprime scores.
97
This report largely adopts methodology for identifying accounts in persistent debt as developed by the United
Kingdom’s Financial Conduct Authority in their study of the credit card market. See Financial Conduct Authority,
Credit card market study: persistent debt and earlier intervention (Feb. 2018),
https://www.fca.org.uk/publications/policy-statements/ps18-04-credit-card-market-study. However, while the UK
regulators adopt a rolling 18-month window for identifying accounts in persistent debt, we limit our approach to
each calendar year where most payments go to paying interest and fees.
49 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
accounts.
98
Yet, the costs borne by revolving accounts still support the operational costs
transacting accounts incur on their “free” credit cards (for those without an annual fee).
99
FIGURE 1: SHARE OF COSTS AND REWARDS BY ACCOUNT TYPE, 2022 (Y-14+, MMI)
4.1 Total cost of credit
TCC as a share of cycle-ending balances for both general purpose and private label card accounts
declined through 2021 but then increased in 2022. The decline in costs in 2021 is largely
attributable to a proportionally greater dip in interest and fees charged (the measure’s
numerator) than debt (its denominator).
100
General purpose cards’ cost of credit of 17.8 percent
in the fourth quarter of 2022 was the highest observed since at least 2015. Private label TCC
increased at a slower rate and ended 2022 below 2019 levels. Fee costs remained a flat share of
overall debt at three and six percent of general purpose and private label cycle-ending balances,
respectively.
98
See Section 2.2.2.
99
A 2015 paper found that operational costs are $50 per account per year with about 15 percent going toward
marketing and consumer acquisition expenses. Agarwal, et al, Regulating Consumer Financial Products: Evidence
from Credit Cards (2015) at 122, https://www.jstor.org/stable/26372597.
100
See Section 3.2.
27%
94%
73%
6%
Rewards earned
Interest and fees
charged
0%
10% 20% 30% 40% 50% 60% 70%
80% 90%
100%
Revolving accounts Transacting accounts
50 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 2: QUARTERLY TOTAL COST OF CREDIT, AS AN PERCENTAGE OF ANNUALIZED CYCLE-ENDING
BALANCES (Y-14+)
Cardholders with subprime and deep subprime scores pay two to four times more in interest
and fees per dollar of credit extended than those with scores above 720. Consumers with lower
scores are charged higher interest rates to revolve a balance on a general purpose card under
risk-based pricing. While private label card issuers charge similar APRs to cardholders across
credit score tiers, costs for private label revolving accounts also generally increase as credit
scores decrease because cardholders with above-prime scores receive more promotional offers
and incur fewer fees.
101
101
At the end of 2022, the average APR on private label cards for cardholders in the superprime tier was 27 percent
compared to 28 percent for those with deep subprime scores—a spread of one percentage point. For general purpose
accounts, the average APR for those with deep subprime scores less the mean for those in the superprime tier was
eight percentage points.
14.1%
14.4%
15.2%
16.3%
16.5%
15.9%
15.6%
17.8%
22.2%
22.5%
21.8%
22.1%
22.4%
21.1%
20.0%
21.6%
2015 2016 2017 2018 2019 2020 2021 2022
0%
5%
10%
15%
20%
25%
General purpose Private label
51 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 3: ANNUAL TOTAL COST OF CREDIT, AS A PERCENTAGE OF CYCLE-ENDING BALANCES,
REVOLVING ACCOUNTS, 2022 (Y-14+)
For people who use their card only to transact (i.e., they pay off each monthly statement in full),
the average cost of using that credit card is less than one percent of total spending. For these
“transacting” accounts, this report calculates TCC as a share of purchase volume, since cycle-
ending balances are not an accurate reflection of account use for this group. Using this cost
measure, there were no significant changes from 2015 through 2022. In contrast to revolving
accounts, fees—particularly annual fees on general purpose accounts—represent nearly all costs
for transactors. However, transacting accounts may still be assessed interest in some cases (e.g.,
a cash advance or in the months after a late payment prior to the restoration of the grace
period). TCC for transacting accounts is greater in lower credit tiers, but, notably, few
cardholders with below-prime scores completely pay off their cycle-beginning balances in a
given month, as discussed in Section 3.3.
FIGURE 4: ANNUAL TOTAL COST OF CREDIT, AS A PERCENTAGE OF PURCHASE VOLUME,
TRANSACTING ACCOUNTS, 2022 (Y-14+)
36%
29%
39%
24%
28%
20%
22%
16%
15%
12%
10%
19%
22%
General purpose
Private label
0%
5%
10%
15%
20%
25%
30%
35%
40%
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
3.9%
4.7%
1.5%
2.6%
0.7%
1.4%
0.3%
0.6%
0.2%
0.3%
0.4%
0.8%
General purpose Private label
0%
1%
2%
3%
4%
5%
Subprime and deep subprime Near-prime Prime Prime plus Superprime Overall
52 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
4.2 Interest
In aggregate, interest continues to be the primary cost of credit cards as it exceeded $100 billion
in 2022 for the first time since 2019. Total finance charges dropped substantially to $96.4
billion in 2020 and $87.6 billion in 2021 with higher payment rates and lower APRs after
declines in the prime rate. Interest assessed grew from mid-2021 through 2022 as purchase
volume, balances, and APRs all rose starting in March 2021. The $30.5 billion in nominal
interest assessed during the fourth quarter of 2022 was the highest amount since at least 2015,
but real finance charges (those adjusted for inflation) were still below pre-pandemic levels at the
end of the period studied.
FIGURE 5: QUARTERLY INTEREST ASSESSED (Y-14+)
4.2.1 APR
After receding in 2020 and not changing in 2021, non-promotional retail APRs on credit cards
reached new highs in 2022.
102
The average APR on private label cards at the end of 2022 was
27.7 percent, an increase of more than two percentage points from two years prior. Private label
APRs remain much higher than general purpose card APRs. However, the gap between card
types shrank over the past two years, as fewer private label cards are tied to a variable rate index
and saw lower incidence of upward repricing. Average general purpose APRs rose to 22.7
percent from recent lows of 18.8 percent in mid-2020. Between March and December 2022, the
prime rate, or the benchmark most commercial banks use to set cardholders’ APRs, increased a
102
For the purposes of this report, non-promotional APRs are defined as those greater than 4 percent. One of the
most common comments from consumers to the RFI was that interest rates are now too high.
$18.5B
$20.3B
$22.8B
$25.7B
$26.6B
$22.7B
$22.4B
$30.5B
$23.3B
$25.1B
$27.6B
$30.4B
$30.8B
$26.0B
$23.8B
2015 2016 2017 2018 2019 2020 2021 2022
$0
$5B
$10B
$15B
$20B
$25B
$30B
$35B
Interest (nominal) Interest (real)
53 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
total of four percentage points.
103
These rate increases drove much of the recent sharp growth in
APRs shown in Figure 6, because almost all general purpose account interest rates are tied to a
variable rate index. As such, credit card APRs increase or decrease as the market interest rate
rises or falls. However, changes in prevailing market interest rates do not entirely explain the
rise in general purpose APRs since at least 2015.
FIGURE 6: QUARTERLY AVERAGE APR (Y-14+)
Issuers’ growing margin (APR less the prime rate) represents a significant portion of the
increase in the average APR in the Y-14 over the past eight years.
104
Despite delinquency and
charge-off rates falling to historic lows in 2021 and 2022,
105
major issuers’ margins on general
purpose cards tied to the prime rate continued to climb, as shown in Figure 7, increasing two
percentage points from 2015 through 2022. Greater access to credit for consumers with lower
scores also does not explain the increasing margin, as the trend was apparent across all tiers
during this time period. Cardholders with superprime scores saw margins grow 1.6 percentage
points while other tiers’ average APR margins increased 2.3 to 2.6 percentage points.
103
Fed. Reserve Bank of St. Louis, Bank Prime Loan Rate, https://fred.stlouisfed.org/series/MPRIME (last accessed
June 2, 2023).
104
Margaret Seikel, Examining the factors driving high credit card interest rates, CFPB (Aug. 12, 2022),
https://www.consumerfinance.gov/about-us/blog/examining-the-factors-driving-high-credit-card-interest-rates/.
105
See Section 3.4.
18.0%
18.6%
19.5%
20.7%
20.3%
18.9%
19.3%
22.7%
25.0%
24.9%
25.9%
26.6%
26.6%
25.4%
25.6%
27.7%
2015 2016 2017 2018 2019 2020 2021 2022
0%
5%
10%
15%
20%
25%
30%
General purpose Private label
54 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 7: QUARTERLY AVERAGE APR MARGIN, GENERAL PURPOSE CARDS TIED TO THE PRIME RATE
(Y-14)
Limitations on repricing could push average margins higher, but these restrictions do not
appear to explain the steady, market-wide increase in APRs. Industry commentors have argued
CARD Act restrictions on upward repricing have resulted in higher interest rate margins.
106
The
CFPB did find that credit card interest rates increased in a decreasing rate environment in its
2013 report,
107
and other research found that consumer credit cards were less likely to receive
rate changes after the restrictions were put into place.
108
While CARD Act restrictions may be
responsible for some of the initial increases in margins following implementation, the growth in
margins over the past ten years suggests another factor may be involved, such as a lack of
competition on APRs.
The apparent lack of rate competition likely drove the increase in average margin, as issuers
grew interest revenue to offset increasing expenses and maintain high ROAs. Price competition
may be reduced if consumers are unwilling or unable to base their purchase decision on price.
Survey data suggest that many consumers do not know their credit card APR, nor do they shop
with it in mind, focusing instead on annual fees and rewards.
109
For those who do not carry a
106
See American Bankers Association (ABA), Consumer Bankers Association (CBA), and National Association of
Federally-Insured Credit Unions (NAFCU) comment letter at 2.
107
See 2013 Report, supra note 3, at 31 to 32.
108
See Section 6.1.1 in 2019 Report, supra note 3. See also [Working Paper] Dou, et al., Does the Card Act Affect Price
Responsiveness? Evidence from Credit Card Solicitations, (Mar 2022),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4050426.
109
See AARP comment letter at 2: “A recent survey showed that 47% of U.S. cardholders indicated they did not know
or were unsure about their credit cards’ interest rates, with that number rising to 55% for Gen Z respondents. If
credit card users are unsure about their interest rates, they cannot effectively plan for or adapt to rising rates." See
13.4%
13.8%
14.2%
14.4%
14.6%
14.9%
15.0%
15.4%
15.4%
2015 2016 2017 2018 2019 2020 2021 2022
0%
5%
10%
15%
20%
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
55 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
balance from one month to the next, interest rates would not be relevant when choosing a card.
Yet, APR is the primary cost of credit to revolving cardholders. Furthermore, in times of
financial distress, an “idealistic transactor” may find themselves charged interest on a balance
they originally expected to pay in full.
110
Even if a consumer is price sensitive, finding the actual
purchase APR prior to account opening can be a major challenge, as most issuers only disclose a
range.
111
Issuers have an incentive to avoid price competition. Companies benefit financially if
they can set higher APRs without losing too many customers to cheaper options, potentially
explaining issuers’ reluctance to provide transparent pricing prior to origination or proactively
decrease rates for existing cardholders.
112
Instead, issuers may be raising margins to pay for the
increasing costs of rewards programs used to attract more customers and retain existing
cardholders.
UPWARD REPRICING
Upward APR repricing accelerated in 2022, as the prime rate increased in most quarters. Under
one exception to the CARD Act’s general prohibition on increasing rates, card issuers are
permitted to increase the APR existing (and new) balances if a card’s rate is indexed to a market
also New York City Department of Consumer and Worker Protection, at 5, “DCWP counselors have reported that
clients find it difficult to find their annual percentage rate (APR) and other relevant terms of their credit cards." See
also Christopher Stevens comment, "I've declined most credit offers due to interest rates in excess of 25%. This
needs to be made clearer in each offer instead of just ‘knowing where to look’, as I do." See also PaymentsJournal,
The Most Important Factors for Consumers Choosing a Credit Card (Nov. 2021),
https://www.paymentsjournal.com/the-most-important-factors-for-consumers-choosing-a-credit-card/.
110
According to the Survey on the Economic Well-Being of U.S. Households (SHED), revolving a balance on a credit
card was the most common plan for covering a $400 emergency expense those who could not immediately pay it in
cash or its equivalent. See note 86, supra.
111
See Section 7.2.2 for more information on how soft inquiries could promote comparison shopping. See also Greg
Leimeister comment, “When looking into opening a new account it's difficult to find out what the APR is on the card
offered.”
112
Several individual commentors raised concerns around issuers’ disinclination to reduce rates. See Valerie
McCormick comment, “Credit card companies are quick to increase your interest rate (APR) when you are late with
them, but there is not a practice to review your account after a set period of time to potentially decrease the interest
rate. You have to call and request it….It can take some time to get through to the appropriate department with this
request…. Some people do not know that you can call and make this type of request to reduce your APR.” See also
Toby Gussman comment, “despite using my three cards regularly (to keep them active), paying my bills on-time, and
paying well above the minimum payment owed every month, I am only entitled to interest rates on my balances
above 25% APR!! This is approaching payday loan levels!! I have never called the card issuers to request an increase
to my credit limit or a reduction in the interest I am required to pay. However, the card issuers have had no problem
automatically raising my credit limits several times, but have somehow failed to automatically reduce my high
interest rates.” See also Patricia Ameral comment, “Never missed or late on any payments the APR is 29.9% which is
insane especially for myself with excellent credit and no missed or late payments... They keep saying NO lowering
the Annual APR.” See also Christopher Lee comment, “Interest rates are too high....No lenders retroactively lower
terms or interest.”
56 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
rate that increases.
113
As of 2022, 98 percent of general purpose accounts in the Y-14 were
variable rate cards of this kind, compared to only two-thirds of private label accounts.
Accordingly, general purpose cards show a higher rate of upward repricing than private label
accounts (Figure 8). Cardholders with deep subprime scores saw a lower incidence of upward
repricing compared to prime and above score cardholders. One explanation may be that issuers
are hesitant to price cards above 36 percent—the interest rate cap for some states and under the
Military Lending Act (MLA)—and some cards held by cardholders with lower scores may have
come close to or reached 36 percent due to previous variable rate adjustments.
114
In a
representative sample of the Y-14, there were no instances of accounts with APRs at or above 36
percent, but some products targeted at consumers with subprime scores currently have
agreements contracted at 36 percent.
115
FIGURE 8: MONTHLY AVERAGE INCIDENCE OF UPWARDS APR REPRICING (Y-14+)
A second notable exception to CARD Act restrictions on upward repricing, called the
“delinquency exception,” permits issuers to increase rates when a consumer does not pay at least
the minimum periodic payment within 60 days after it is due.
116
In such circumstances, issuers
must first provide consumers a notice including a statement of the reason for the increase and a
113
A card issuer is permitted to increase the APR on a variable rate card when the increase is due to an increase in an
index that is outside the issuer’s control and available to the general public. 12 C.F.R. § 1026.55(b)(2).
114
10 U.S.C. § 987(b). The MLA applies a 36 percent cap on the Military Annual Percentage Rate, which includes costs
like finance charges, certain fees, and add-on credit-related product charges. See Cons. Fin. Prot. Bur., What is the
Military Lending Act and what are my rights?, https://www.consumerfinance.gov/consumer-tools/educator-
tools/servicemembers/military-lending-act-mla/.
115
See e.g., First Premier Bank, Current Credit Card Agreements,
https://connect.mypremiercreditcard.com/Home/Offers (last visited June 28, 2023).
116
12 CFR 1026.55(b)(4).
12%
13%
12%
36%
1%
1%
1%
58%
6%
10%
6%
22%
30%
2015 2016 2017 2018 2019 2020 2021 2022
0%
10%
20%
30%
40%
50%
60%
General purpose Private label
57 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
statement that the increased rate will cease to apply if the issuer receives six consecutive
required minimum periodic payments on or before the payment due date.
117
For consumers who
meet the six timely minimum payments requirement, issuers are required to reduce that rate.
118
For consumers whose rates are not reduced in this manner, issuers must conduct a periodic
review based on certain factors and reduce the APR applicable to the consumer’s account, as
appropriate.
119
Data suggest this type of penalty repricing is fairly uncommon, with the monthly
incidence of upward repricing typically 30 basis points or less on non-promotional APRs in
quarters without an increase in the prime rate.
4.2.2 Effective interest rates
For the first time in our data, the effective interest rate (EIR) in 2022 on general purpose cards
exceeded that of private label cards. While APR is a useful barometer of issuer pricing strategies,
EIR provides a better measure of the cost of interest to cardholders because EIR incorporates
the effects of cash advances and short-term promotional rates, such as those associated with
deferred interest and balance transfer promotions. An EIR is computed by annualizing the total
of all interest charges consumers paid divided by those consumers’ cycle-ending balances.
120
Most private label cards have much higher APRs than general purpose card alternatives, but the
EIR for both is similar across tiers, given how frequently private label cards offer low-interest or
deferred-interest promotions on retail products.
121
117
Id.
118
If the rate applicable immediately prior to the increase was a variable rate, the issuer must reduce the rate to a
variable rate determined by the same formula (index and margin) that was used to calculate the rate applicable
immediately prior to the increase. Id.
119
12 CFR 1026.59. At least one issuer has failed to implement this review provision, which also applies to rate
increases due to reasons other than delinquency and has since provided compensation to impacted cardholders. See
Consent Order at 3-9, In re CITIBANK N.A., 2018-CFPB-0003 (Jun. 29, 2018),
https://files.consumerfinance.gov/f/documents/bcfp_citibank-na_consent-order_2018-06.pdf.
120
Depending on payment strategies (and purchases throughout the cycle), the cycle-ending balance could be either
dramatically higher or lower than the average daily bal ance, which is typically the basis of finance charge
calculations.
121
See Section 5.2 of the 2021 Report, supra note 3, for more information on deferred interest. Industry commentors
highlighted both concerns and benefits of deferred interest promotions. One commentor notes that “Deferred
interest promotions are popular with consumers and are oftentimes used by Americans in emergency situations
where a home appliance or other critical products need repair or replacement...” See also Retail Industry Leaders
Association Comment Letter, at 1-2. More than one commentor recommended banning deferred interest products,
because they “are inherently deceptive” and often do not communicate the end of promotional periods. See all
National Consumer Law Center Comment Letter, at 3; New York City Department of Consumer and Worker
Protection Comment Letter, at 5-6.
58 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 9: ANNUAL EFFECTIVE INTEREST RATE, REVOLVING ACCOUNTS, 2022 (Y-14+)
Unexpected inflation implied lower real EIRs than the otherwise stable nominal rates suggest
for much of 2021 and 2022. Annualized quarterly real effective interest rates on general purpose
cards rarely dipped below 10 percent since the beginning of 2015 but stayed below the 11 percent
level for the entire calendar year of 2021 and the first half of 2022, hitting a low of 4.2 percent
for the first quarter of 2022. As the similar nominal rates (discussed above) imply, real EIRs of
private label cards were essentially the same as for general purpose cards over the same period,
indicating an even larger shift for private label cards from their 2015 to 2020 levels.
FIGURE 10: QUARTERLY ANNUALIZED EFFECTIVE INTEREST RATE LESS INFLATION, REVOLVING
ACCOUNTS (Y-14+)
23%
22%
22%
20%
21%
18%
18%
15%
12%
9%
7%
17%
16%
General purpose Private label
0%
5%
10%
15%
20%
25%
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
14.8%
11.7%
12.5%
17.8%
15.1%
13.9%
9.1%
16.4%
19.1%
15.6%
15.3%
19.5%
16.4%
15.2%
9.3%
15.5%
2015 2016 2017 2018 2019 2020 2021 2022
0%
5%
10%
15%
20%
General purpose Private label
59 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
4.2.3 Servicemember rate reductions
The Servicemembers Civil Relief Act (SCRA) provides important legal and financial protections
to active duty servicemembers.
122
These protections include the ability to reduce the interest
rate on any pre-service obligations or liabilities to a maximum of six percent; protections against
repossession of certain property without a court order; protections against default judgments in
civil cases; protections against certain home foreclosures without a court order; and the ability
to terminate certain residential housing and automobile leases early without penalty.
123
In
December 2022, the CFPB released a report examining National Guard and Reserve
servicemembers’ usage of credit protections under the Servicemembers Civil Relief Act. The
report found that only a small fraction of activated National Guard and Reservists likely utilized
the SCRA interest rate reduction benefit on auto and personal loans and identified several
possible approaches to increase servicemember access to SCRA protections.
124
To better
understand how these recommendations and other benefits are currently offered in the credit
card market, this section reviews SCRA policies and other information from mass market issuers
credit card issuers as of the end of 2022.
125
SCRA rate reduction requests declined during the pandemic but increased as credit card
balances grew. The number of accounts reviewed for SCRA eligibility dropped from 420,000 in
2019 to 240,000 in 2022. Total SCRA rate reduction approvals declined during the pandemic in
2020 and 2021 but increased in 2022, as shown in Figure 11. Issuer denials of rate decrease
requests remained relatively constant during this same period. As discussed in prior sections,
revolving balances on credit cards declined from 2019 to 2021 and then increased in 2022. The
decline in SCRA requests during this period can likely be attributed to the overall decline in total
balances and the share of revolving accounts discussed in Sections 3.2 and 3.3, as an eligible
servicemember has less incentive to request a rate reduction if they have low or no balances.
122
50 U.S.C. §§ 3901-4043.
123
50 U.S.C. § 3931-3959.
124
Charles Goldman and Yael Katz, Protecting Those Who Protect Us: Evidence of activated Guard and Reserve
servicemembers’ usage of credit protections under the Servicemembers Civil Relief Act, CFPB (2022),
https://files.consumerfinance.gov/f/documents/cfpb_servicemembers-usage-of-scra-credit-protections_2022.pdf.
125
Consumer groups commented, “the CFPB should conduct its own detailed research into the impact of the MLA and
Servicemembers Civil Relief Act’s coverage of credit cards on servicemembers, and not rely on flawed outside
research that portrays such impact in a negative light.” See NCLC comment, at 13 to 14.
60 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 11: ANNUAL SCRA REQUEST DECISION VOLUME (MMI)
Major credit card issuers have taken some steps to streamline servicemember utilization of the
interest rate reduction benefit. The primary way servicemembers utilize the interest rate
reduction benefit is by providing a creditor with written notice of their military status and
supporting documentation, such as military orders or any other appropriate indicator of military
service.
126
Creditors may also independently verify a servicemember’s request or proactively
identify servicemember eligibility using information from the Defense Manpower Data Center
(DMDC), a database operated by the Department of Defense.
127
All surveyed credit card issuers check the DMDC database to independently verify a
servicemember’s military status and eligibility for the interest rate reduction benefit. The check
eliminates the need for most servicemembers to provide additional documentation.
128
At least
two credit card issuers have SCRA policies that include proactively checking the DMDC database
to identify accounts that may be eligible for SCRA benefits, but the majority of those surveyed
still require servicemembers to request a rate reduction. The CFPB has previously identified
using the DMDC database to proactively identify servicemembers and provide them rate
reductions on eligible accounts as one approach to increasing low utilization of SCRA
benefits.
129
Each surveyed issuer also has SCRA policies that require an enterprise-wide search
for additional servicemember accounts and the application of the interest rate reduction to all
126
50 U.S.C. § 3937(b)(1)(A).
127
50 U.S.C. § 3937(b)(1)(A).
128
50 U.S.C. § 3937(b)(1)(B). A creditor may use, in lieu of notice and documentation under subparagraph (A),
information retrieved from the Defense Manpower Data Center through the creditor's normal business reviews of
such Center for purposes of obtaining information indicating that the servicemember is on active duty.
129
Supra note 124, at 34.
317K
190K
124K
133K
106K
110K
96K
107K
0
100K
200K
300K
400K
2019 2020 2021 2022
Approvals Denials
61 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
accounts held by the institution when a servicemember notifies the issuer that they are eligible
for SCRA benefits and protections. This practice was also identified as an implementation
approach that could increase utilization rates.
130
Many credit card issuers offer servicemembers a lower interest rate than the maximum six
percent interest rate required by the SCRA. The SCRA limits interest rates on pre-service
obligations or liabilities to a maximum of six percent and extends that benefit during the period
of activation or, in the case of certain mortgages, for an additional year following military
service.
131
Half of the surveyed issuers reduced interest rates to the six percent required by the
SCRA, or 5.9 percent, slightly below the maximum permissible rate. One-fourth of the surveyed
issuers reduced rates to 4 percent. Other surveyed issuers reduced rates to zero percent, and still
others reduced rates to 4 percent for certain home loans and reduced rates to 6 percent for other
types of accounts. The calculation of the SCRA six percent interest rate reduction also includes
certain fees associated with that card (i.e., annual fees).
132
All issuers either included these fees
in the six percent interest rate limit or waived these fees, and many included late fees in the fees
waived for eligible accounts.
Credit card issuers often provide expanded benefits or give servicemembers additional time to
request a reduced interest rate. The SCRA allows servicemembers to request an interest rate
reduction on an obligation or liability for up to 180 days after the date of a servicemembers’
termination or release from military service.
133
The SCRA also states that an obligation or
liability eligible for the rate reduction must be incurred before the servicemember enters
military service.
134
The interest rate applies during the period of military service and, in the case
of home mortgages, for one year after military service.
135
A few issuers allowed servicemembers
to notify them of their active duty status up to one year after the end of active duty, and one
offered nine months. Half of issuers provided the 180-day notification period required by the
SCRA and did not provide for extra time to make an interest rate reduction request. While all
credit card issuers had policies that required an eligible account to be opened prior to active
duty, most credit card issuers extended the interest rate reduction benefit to charges made
130
Id.
131
50 U.S.C. § 3937(a)(1).
132
50 U.S.C. § 3937(d)(1). The term "interest" includes service charges, renewal charges, fees, or any other charges
(except bona fide insurance) with respect to an obligation or liability.
133
50 U.S.C. § 3937(b)(1)(A).
134
50 U.S.C. § 3937(a)(1).
135
Id.
62 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
during active duty and did not limit the interest rate reduction solely to pre-service balances.
Issuers also frequently extended the time for which the reduced interest rate applied. One issuer
had no de-enrollment process, and some issuers provided the SCRA interest rate reduction for
credit cards for one year after the end of military service. A few issuers provided interest rate
reductions only during military service, or for an additional year for mortgage loans, as required
by the SCRA.
Some credit card issuers have adopted SCRA policies that extend the SCRA interest rate benefit
to spouses or dependents beyond what is required. The SCRA interest rate reduction benefit is
available for obligations or liabilities incurred by a servicemember or the servicemember and
their spouse jointly.
136
Most issuers have policies that extend the interest rate benefit in certain
circumstances. For example, some issuers extend benefits to domestic partners and dependents,
and some extend benefits to accounts that are not jointly held with the eligible servicemember.
A minority of those surveyed limited the interest rate reduction benefit to joint accounts held by
the eligible servicemember and their spouse.
4.3 Fees
Cardholders incurred $25.4 billion in fees in 2022, the highest nominal level observed in our
data, up more than 20 percent from 2020 levels of $20.6 billion. Fee waiver programs may have
reduced fees charged in 2020. However, private relief efforts for pandemic-related hardship do
not explain the drop in 2021, as most pandemic-related waiver programs stopped new
enrollment that year.
137
Rather, the lower fee volume in 2021 occurred because more
cardholders paid their bills on time and incurred fewer late fees. Annual fees grew in 2021 and
2022, while other fees (a combination of non-late and non-annual transactional and other
penalty fee categories) remained fairly similar in aggregate.
136
50 U.S.C. § 3937(a)(1).
137
See 2021 Report, supra note 3, at Section 5.
63 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 12: ANNUAL TOTAL FEES CHARGED (Y-14+)
Collectively, fees comprise just under one-fifth of total consumer costs and have grown as a
share of balances. For consumers who do not revolve, fees are the primary cost of using a credit
card. As a share of revolving balances, total fees increased over the past two years. For private
label accounts, fees were equivalent to 5.9 percent of balances in 2022, up from 5.2 percent in
2019; on general purpose cards, they were 2.5 percent of balances, up from 2.0 percent. Relative
to balances, fees incurred on private label accounts that revolve are higher than for their general
purpose counterparts. Fees as a share of debt on private label cards have not yet returned to pre-
pandemic norms of above six percent. Yet, fee-to-balance ratios hit their highest level on general
purpose cards in 2022 since at least 2015, driven by an increase among cardholders with
subprime and deep subprime scores at 10 percent in 2022, up from 7.5 percent of balances in
2020.
4.3.1 Annual fees
In the observed period, while the percentage of consumers who pay an annual fee declined, the
total dollars paid in annual fees was the highest level in our data. Annual fee volume has more
than doubled from $3.0 billion in 2015 to $6.4 billion in 2022. The typical periodic fee has
shifted from being charged to cardholders with subprime scores to being paid by cardholders in
the highest score tiers. The share of accounts assessed an annual fee in the Y-14 declined about
one percentage point since 2020 to 16.3 percent. More cards in prime plus and superprime tiers
pay this charge each year. In contrast, annual fees have become less prevalent for cardholders
with below-prime scores.
$3B
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$4B
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$0
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2015
2016
2017 2018 2019 2020 2021 2022
Annual fee Late fee Other fees
64 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 13: QUARTERLY ANNUAL FEE PREVALENCE, GENERAL PURPOSE (Y-14)
The average annual fee is becoming more expensive, partly reflecting the increased prevalence
of credit cards with more generous rewards but greater annual fees. Cardholders with
superprime scores were charged an average of $129 in annual fees in 2022 for each account that
carried such a fee. Some share of revenue from cards held by consumers with prime and above
scores is typically returned to cardholders in the form of rewards and other benefits.
138
In
contrast, cardholders in lower credit score tiers may pay annual fees to offset higher credit risk
or operating costs relative to typically lower revolving balances.
FIGURE 14: AVERAGE ANNUAL FEE, GENERAL PURPOSE (Y-14)
138
See Section 4.4 for more information on the net cost of credit and 6.1 for rewards more generally.
18%
18%
17%
17%
17%
17%
17%
16%
2015 2016 2017 2018 2019 2020 2021 2022
0%
10%
20%
30%
40%
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
$62
$65
$76
$81
$88
$94
$98
$105
2015 2016 2017 2018 2019 2020 2021 2022
$0
$20
$40
$60
$80
$100
$120
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
65 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
4.3.2 Late fees
Total late fee volume and incidence in 2022 returned to pre-pandemic levels, following declines
in both 2020 and 2021. Quarterly late fees charged exceeded $4 billion for the first time in the
fourth quarter of 2022. Issuers in the Y-14+ reported $14.5 billion in late fees in 2022, up from
$11.3 billion in 2021, $11.9 billion in 2020, and slightly above $14.2 billion in 2019. Declines in
late fees in 2020 and 2021 may be attributed to card issuer late fee waiver programs and other
forms of federal disaster relief implemented on a temporary basis during the pandemic. Despite
these measures, late fees consistently ranked as the most significant fee assessed to cardholders
in both dollar amount and frequency.
FIGURE 15: QUARTERLY LATE FEES CHARGED (Y-14+)
Late fee incidence returned to about one late fee per year per account in 2022. For all tiers, late
fees remain more common on private label accounts than general purpose cards. The burden
continued to fall disproportionally on accounts with lower scores, largely due to their higher
incidence of late payments.
139
Consumers with superprime scores hold 30 percent of card
accounts but generated only six percent of late fee volume; in contrast, consumers with deep
subprime scores hold about six percent of card accounts but generated 28 percent of late fees.
139
See Late Fee Report, supra note 29, at 10.
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2015 2016 2017 2018 2019 2020 2021 2022
$0
$1B
$2B
$3B
$4B
66 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 16: AVERAGE LATE FEE INCIDENCE PER YEAR, 2022 (Y-14+)
The average late fee increased from $31 in 2021 to $32 in 2022 across both first-time and repeat
incidents of late payment, explaining part of the increase in total volume in 2022.
140
This
increase is largely attributable to the automatic $1 increase in the penalty fee safe harbor under
Regulation Z to $30 for a first violation and $41 for subsequent late payments within six billing
cycles (if less than the minimum payment due), implemented in late-2021.
141
Most of the largest
issuers charge the safe harbor amount.
142
On average, issuers charge cardholders with deep
subprime scores over $8 more than superprime accounts per late payment. This occurs for two
reasons. First, cardholders with below-prime scores are more likely to incur repeat late fees at
the higher fee of $41. Second, cardholders with higher scores obtain late fee waivers significantly
more often than those in lower tiers.
143
140
Average late fee is net volume (sum of late fees less those later waived) divided by total late fee incidence
(regardless of whether the fee is later reversed).
141
86 Fed. Reg. 60357 (Nov. 2021), https://www.federalregister.gov/documents/2021/11/02/2021-23478/truth-in-
lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified. Issuers generally assess a late
fee when consumers do not make at least their minimum payment by the monthly due date. The dollar amounts of
late fees and other penalty fees are subject to CARD Act provisions that generally require them to be “reasonable and
proportional.” Issuers can set a late fee amount based on the cost of collections or use the regulatory “safe harbor,”
which has historically been adjusted for inflation. Initially, the safe harbor was set at $25 for an initial late fee and
$35 for a second late fee within six billing cycles of a prior late fee.
142
See Late Fee Report, supra note 29.
143
Y-14. Issuers waive late fees as a courtesy in about five percent of overall cases. See 88 Fed. Reg. 18906 (Mar.
2023), https://www.federalregister.gov/documents/2023/03/29/2023-02393/credit-card-penalty-fees-re gu lati on-
z, at note 162.
3.7
5.1
2.3
2.8
1.5
1.9
0.8
1.4
0.4
0.8
0.2
0.3
0.8
1.3
General purpose Private label
0.0
1.0
2.0
3.0
4.0
5.0
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
67 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
4.3.3 Other fees
The volume of other (not annual or late) fees that issuers charge on credit cards declined in
2020 and 2021 but returned to pre-pandemic levels of just over $4 billion in 2022. Roughly half
of other fee volume in 2022 was incurred by cardholders for using balance transfers and cash
advance features.
144
The second most common other fee, debt suspension, has remained fairly
stable. Of all fee types, returned payment fees, also known as non-sufficient funds (NSF) fees,
grew the fastest over 2021 and 2022, increasing 60 percent in two years, despite remaining the
smallest discrete fee category at less than one percent of total fee volume. Typically, issuers must
choose between assessing a late or a returned payment fee when a consumer does not have
sufficient funds for an attempted payment nor a subsequent successful payment before the due
date. Issuers may be assessing NSF fees rather than late fees in more cases. Over-limit fees
remained practically non-existent, as they have since the implementation of the CARD Act and
its requirement that consumers affirmatively opt in.
145
Fees not broken out into discrete
categories totaled almost $1 billion in 2022. These fees may be charged for reasons like foreign
transactions,
146
breaking transactions into installment plans,
147
card replacement, statement
copies, and beyond.
FIGURE 17: ANNUAL OTHER FEES CHARGED (Y-14+)
144
See Section 6.3 and Section 6.4 for more information regarding balance transfers and cash advances.
145
See Section 6.5 for more information regarding over-limit transactions.
146
Some credit card companies charge a fee as a percentage of an international transaction, but many offer this
benefit without additional costs. Two commentors characterized foreign transaction fees ask junk fees.
147
See Section 6.2 for more information regarding installment plans.
$1.2B
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$1.0B
$1.0B
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$1.0B
$0.9B
$1.2B
$662M
$729M
$714M
$731M
$737M
$542M
$636M
$718M
$875M
$855M
$903M
$995M
$876M
$634M
$749M
$913M
$73M
$96M
$116M
$135M
$161M
$140M
$172M
$225M
$0
$1B
$2B
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$4B
$5B
2015 2016 2017 2018 2019 2020 2021 2022
Balance transfer Debt suspension Cash advance Other Returned payment
68 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
4.4 Net cost of credit
After accounting for the value of earned rewards, the net cost of revolving general purpose credit
cards at major issuers dropped in 2021 and then increased in 2022. Net cost of credit (NCC) for
revolving accounts is calculated as total interest and fees charged less rewards earned as an
annualized percentage of cycle-ending balances.
148
When a consumer revolves a balance on
their credit card, interest and fee costs typically exceed the value of any rewards earned.
Rewards could reduce a cardholder’s cost of credit by two percentage points if subtracting the
dollar value of earned rewards from costs as a share of balances. Because cardholders with
above-prime scores are more likely to carry rewards cards and because earning is tied to new
spending on an account, superprime consumers with higher purchase volumes see a reduction
in their cost of credit of almost five percentage points when including the value of earned
rewards. In comparison, consumers with subprime scores receive annual rewards-to-balances
value of less than one percentage point. Increasing rewards from greater purchase volume in
2021 and 2022 explain part of the trends in Figure 18, along with declining costs and debt in
2021 that then rebounded in 2022.
FIGURE 18: QUARTERLY ANNUALIZED NET COST OF CREDIT, REVOLVING ACCOUNTS, GENERAL
PURPOSE (Y-14, MMI)
Cardholders who pay off their credit card bill in full each month earn more in rewards on
average than they pay in interest and fees, and the benefit of rewards has increased since 2020.
For transacting general purpose accounts at major issuers, NCC was negative 1.3 percent in 2021
and 2022, an improvement for cardholders from negative 1.1 percent in 2019 and 2020. In other
148
As this report calculates rewards for all general purpose accounts, not just rewards cards, NCC considers the
market-level averages. NCC on rewards cards would be more generous than the statistics presented here.
16.5%
16.2%
15.6%
15.0%
17.2%
2019 2020 2021 2022
0%
5%
10%
15%
20%
25%
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
69 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
words, based on the average NCC, a transacting cardholder who charged $10,000 to a major
issuer’s credit card in 2022 would have earned $135 more in rewards than they paid in interest
and fees that year. For consumers with higher scores, the net costs of cardholding generally
decrease, but those with prime plus scores receive more benefit per dollar spent than those with
superprime scores. One reason could be that higher purchase volume on superprime cards
dilutes the impact per dollar of lump-sum reward awards like sign-up or referral bonuses. For
the small share of transacting accounts with subprime and deep subprime scores, the value of
rewards does not offset the interest and fees associated with those cards.
FIGURE 19: QUARTERLY ANNUALIZED NET COST OF CREDIT, TRANSACTING ACCOUNTS, GENERAL
PURPOSE (Y-14, MMI)
4.5 Rewards earned
Total rewards earned dropped slightly in 2020 but have risen steadily since. Holders of mass
market general purpose cards earned an estimated $41.1 billion in rewards in 2022, a 58 percent
-1.1%
-1.1%
-1.1%
-1.3%
-1.3%
2019 2020 2021
2022
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
70 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
increase from 2019 levels of $26.1 billion.
149
Of the three primary rewards channels (cash back,
miles, and points),
150
points growth drove most of the increase.
FIGURE 20: ANNUAL DOLLAR VALUE OF REWARDS EARNED, GENERAL PURPOSE (MMI)
For those with rewards cards, the average rewards earned per dollar spent has grown since the
pandemic. In 2019 and 2020, general purpose cardholders earned 1.4 cents for each dollar spent
on a rewards card. Earn rates increased to 1.6 cents per dollar in 2021 and 2022. Issuers
typically fund rewards through interchange revenue. For issuers in the Y-14+, the average
interchange rate on general purpose cards was 1.8 percent, with rewards representing almost
nine-tenths of interchange revenue.
151
Earning rates are about the same across credit score tiers
for those with rewards cards, except for consumers with scores above 800. One reason the earn
rate for accounts with superprime scores is lower than other tiers may be because these
149
Rewards earned include both lump-sum rewards such as sign-up bonuses and rewards accumulated at a set rate
per dollar spent but exclude the value of other benefits associated with rewards cards that cannot be measured in
miles, points, or cash back. The value of rewards earned are reported in dollar values as determined by issuers.
Issuers typically valued one point or mile at about $0.01 but had discretion to adjust this value based on their
internal estimates of redemption values and likelihood of forfeiture. See Section 6.1 for more information on rewards
redemption and forfeiture.
This is also a lower-bound on the dollar value of rewards earned, as mass market issuers (MMI) are a large but non-
representative sample of the total rewards marketplace, and issuers may not have insight into all rewards earned,
redeemed, or forfeited when separately managed by a co-brand partner.
150
First, “cash” or “cash back” rewards allow consumers to redeem rewards for statement credits, checks, deposits to
an asset account, or cash at an ATM. Second, “miles” programs managed by third-party airlines are associated with
co-brand cards that allow consumers to accumulate airline-branded rewards when using their card. The remaining
programs are classified as “other,” a category that includes non-cashback issuer-managed programs (such as those
that offer “points” redeemable for travel) as well as programs managed by third parties that are not airlines, such as
hotel chains.
151
See Section 2.2.2 for more information on interchange income and its role in credit card issuers’ profitability.
$4.0B
$3.3B
$4.0B
$5.2B
$10.0B
$9.3B
$12.5B
$15.2B
$12.2B
$11.3B
$16.2B
$21.0B
$0
$10B
$20B
$30B
$40B
2019 2020 2021 2022
Miles Cash-back Points and other
71 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
cardholders are more likely to hold rewards cards that provide more non-pecuniary rewards
(like concierge service, lounge access, free bag checking for flights, or travel insurance) that are
not quantified in the dollar value of rewards earned.
FIGURE 21: QUARTERLY REWARDS EARNED AS A PERCENTAGE OF PURCHASE VOLUME ON REWARDS
CARDS, GENERAL PURPOSE (MMI)
4.6 Persistent debt
The cost of using credit cards differs dramatically based on how long a borrower takes to repay,
and some cardholders find that their debt can linger for a long time if payments are not large
enough to pay down a balance quickly. The longer a consumer carries debt without repaying in
full, the more expensive a purchase becomes. The CFPB finds it appropriate to examine this
relationship between balances, payments, and costs using “persistent debt.” For the purposes of
this report, debt is considered “persistent” if charges for interest and fees exceed half of the
actual payment amount on an account in a given calendar year.
152
Persistent debt is not the
same as negative amortization where the total minimum payment fails to cover at least accrued
interest, but it does indicate longer-term consumer difficulty in paying off new purchases
alongside previous balances at a given interest rate and fee incidence.
About one in ten general purpose accounts in the Y-14 showed persistent debt in 2022. Almost
all were revolving accounts with significant average balances, but this share also includes a small
number of transactors with high annual fees and few purchases. The share of accounts in
152
For example, if a consumer made $1,000 in payments but was charged $550 in interest and fees on an average
balance of $2,500 (for a TCC of 22 percent), we would consider the account to be in persistent debt as only $450
went to repaying the amount borrowed.
1.4%
1.4%
1.6%
1.6%
2019 2020 2021
2022
0%
0.5%
1.0%
1.5%
2.0%
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
72 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
persistent debt steadily increased before the pandemic, reaching 11.9 percent in 2019, before
declining to 8.4 percent in 2021, driven by increased repayment by accountholders with below-
prime scores.
153
In 2022, the share of accounts in persistent debt rose to 9.9 percent, likely due
to macroeconomic factors such as falling real income and rising interest rates.
FIGURE 22: ANNUAL SHARE OF ACCOUNTS IN PERSISTENT DEBT, GENERAL PURPOSE (Y-14)
The persistence of debt is strongly influenced by macroeconomic and policy factors, many of
which significantly changed between 2019 and 2022. When real interest rates rise or the prices
of goods rise faster than wages, consumers will face difficulty repaying existing balances without
either cutting expenses or receiving a windfall.
154
In 2020 and 2021, consumers received a series
of such lump sums: more than 476 million payments totaling $814 billion in federal stimulus
funds.
155
Research suggests at least part of these funds went toward paying down credit cards.
156
These windfall payments enabled some consumers to pay down credit card debt, but as both
153
See Section 3.3 for more information regarding repayment.
154
Comments on difficulty of paying down existing debt were one of the most common responses from consumers.
See Delia Binder comment, “I got behind on credit card payments and had them cancel my cards, but not the money
I owed them, after one month. I was deeply in debt until I received a windfall in the form of an inheritance." See also
John Buhovecky, Loretta Walker, Dawn Jones, Christopher Lee, Amy Moore, Lynn O’Shea, Kathi Thonet, S
Simmons, JoEllen Rudolph, Suzi Love, and Nancy Petranto.
155
Pandemic Oversight, Update: Three rounds of stimulus checks. See how many went out and for how much (Feb.
17, 2022), https://www.pandemicoversight.gov/news/articles/update-three-rounds-stimulus-checks-see-how-
many-went-out-and-how-much.
156
Robert M. Adams et al., Why Did Credit Card Balances Decline so Much during the COVID-19 Pandemic, Bd. of
Governors for the Fed. Rsrv. Sys., (Dec. 3, 2021), https://www.federalreserve.gov/econres/notes/feds-notes/why-
did-credit-card-bal ances-decline-so-much-during-the-covid-19-pandemic-20211203.html.
10.4%
10.7%
11.3%
11.8%
11.9%
9.9%
8.4%
9.9%
2015 2016 2017 2018 2019 2020 2021 2022
0%
10%
20%
30%
40%
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
73 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
inflation and interest rates have risen in the past year and users are incurring late fees at higher
rates, more cardholders may face difficulty managing their debts.
157
157
See e.g., Scott Horsely, Americans are piling up credit card debt — and it could prove very costly, NPR (Jan. 11,
2023), https://www.npr.org/2023/01/11/1148122555/credit-card-debt-inflati on-interest-rate-payments-federal-
reserve.
74 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
5. Availability of credit
As in prior reports, this section examines measures relating to credit card availability. It
explores two broad areas: new account origination and credit availability after origination. To do
so, it tracks the credit card account life cycle, starting with marketing and consumer applications
across a range of channels. Next, we track issuer approvals as well as new account and line
origination. Finally, this section discusses credit lines available to consumers and issuer line
management of existing accounts.
5.1 New accounts
5.1.1 Marketing and comparison shopping
In 2022, credit card marketing efforts were at their highest since at least 2015. Monthly mail
volume reached 610.6 million items in September 2022 after the recent trough of 61.7 million in
July 2020. Credit card marketing picked up in 2021, as average monthly mail volume rose 21
percent year-over-year, before rising a further 60 percent to reach an average of 438.1 million
items per month in 2022. Consumers with scores above 720, who represent the majority of the
scored population, received 40 percent of mail volume.
FIGURE 1: MONTHLY MAIL VOLUME (COMPETISCAN, MINTEL COMPEREMEDIA)
158
158
Data following October 2019 were supplied by Competiscan. Data prior to this date were supplied by Mintel
Comperemedia.
0
100M
200M
300M
400M
500M
600M
2015 2016 2017 2018 2019 2020 2021 2022
Deep subprime Subprime Near-prime Prime Superprime and prime plus No score
75 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
PRESCREENED OFFERS
Prescreened offers continue to generate around 10 percent of applications, a level largely stable
over the course of the COVID-19 pandemic. Prescreened offers, also known as “pre-approved” or
“pre-selected” offers, are solicitations, typically sent via direct mail, that are targeted at specific
people based upon their credit records. For a prescreened offer, credit records are assessed with
a “soft pull” that does not impact a consumer’s credit scores. Issuers tend to send more offers to
consumers with higher scores, because they are more likely to meet the predetermined criteria
issuers provide to credit reporting agencies when identifying prospects. As such, a greater share
of applications from consumers with higher credit scores are in response to pre-screened offers:
16 percent of applications submitted by consumers with both superprime and prime scores in
2022 were facilitated by prescreened offers, while pre-screened offers made up only five percent
of applications for consumers with either subprime or unknown credit scores.
FIGURE 2: SHARE OF APPLICATIONS FACILITATED BY PRE-SCREENED OFFER, GENERAL PURPOSE
(MMI)
Although pre-approved offers are commonly mailed to consumers, pre-screened offers can take
additional forms, including online prequalification channels. Several large card issuers now
provide an online portal where consumers can check if they are likely to qualify for a specific
credit card without impacting their credit scores (as may be the case with a typical credit
application).
159
An issuer may not provide the approval likelihood for all its products. However,
the growing trend of demystifying the credit card application process through accessible digital
engagement rather than issuer-initiated direct mail likely benefits consumers.
159
See, e.g., Melissa Lambarena, Credit Cards That Offer Pre-Qual or Preapproval Without a Hard Pull, NerdWallet,
(July 7, 2023), https://www.nerdwallet.com/article/credit-cards/credit-cards-that-offer-preapproval-without-a-
hard-pull.
8%
6%
10%
9%
11%
10%
2017 2018 2019 2020
2021
2022
0%
5%
10%
15%
No score Subprime and deep subprime
Near-prime Prime
Superprime Overall
76 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
THIRD-PARTY COMPARISON SITES
Third-party comparison (TPC) sites such as Credit Karma, NerdWallet, and others drive a lower
share of credit applications than before the pandemic but remain a significant channel for digital
traffic. The share of general purpose applications submitted via the TPC-site channel remained
at about one-fifth from 2020 through 2022, down from a high of 28 percent in 2019. Typically,
TPC sites assist consumers in finding cards for which they are likely qualified when they seek
credit.
160
Consumers with higher scores are likely to qualify for more credit cards than
consumers with lower scores and may not need as much assistance in finding cards for which
they are qualified. As such, those in the superprime credit tier were the least likely to apply via a
TPC site in 2022. In 2022, 15 percent of consumers with superprime scores applied via a referral
link from TPC sites, whereas 20 percent of consumers with subprime scores and 23 percent of
consumers without credit scores applied via TPC sites. However, the share of consumers with
lower credit scores applying via TPC sites has not returned to pre-pandemic levels, as shown in
Figure 3. TPC sites now facilitate general purpose card applications for consumers in all tiers at
more similar rates than immediately before the pandemic.
FIGURE 3: SHARE OF APPLICATIONS FACILITATED BY TPC SITES, GENERAL PURPOSE (MMI)
160
Consumers are required to permission the TPC to access their data. However, at times, TPC sites have overstated
the approval odds for a given consumer, leading to denials and negative credit score impacts for people who applied
expecting to meet an issuer’s underwriting criteria. See Federal Trade Commission, FTC Finalizes Order Requiring
Credit Karma to Pay $3 Million and Halt Deceptive ‘Pre-Approved’ Claims, (Jan. 23, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-finalizes-order-requiring-credit-karma-pay-3-
million-halt-deceptive-pre-approved-cl aims.
17%
20%
25%
26%
28%
20%
18%
20%
2015 2016 2017 2018 2019 2020 2021 2022
0%
10%
20%
30%
No score Subprime and deep subprime
Near-prime Prime
Superprime Overall
77 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
In 2023, the CFPB updated the fields collected from credit card issuers in the Terms of Credit
Card Plans (TCCP) survey, partly to provide alternative data to those on TPC sites.
161
The survey
data are collected semiannually from the 25 largest card issuers and a sample of at least 125
other issuers, including banks and credit unions. The survey includes information about the cost
and availability of credit card products.
162
Unlike some TPC sites, issuers cannot pay for better
placement on the CFPB comparison site, and the CFPB does not earn a commission from any
referrals to issuer websites.
163
Rather, it is intended to serve as an additional, neutral source to
drive further competition, fairness, and transparency in the marketplace.
5.1.2 Applications
To apply for a card, consumers submit an application through one of several channels, such as
going online, using a mobile application, calling the issuer, or walking into a bank branch or
retail store to fill out a paper or digital application in-person. The issuer then decides whether to
issue a credit card based on its internal underwriting process.
164
Issuers consider economic and
market conditions when determining whether to loosen or tighten standards for approving
individual card applicants. In 2022, U.S. consumers submitted over 160 million credit card
applications, which is roughly the same number as those submitted in 2021 and a significant
increase from the roughly 140 million applications submitted in 2020.
165
Post-pandemic normalization led to a rebound in application volume for general purpose cards,
both overall and for every credit tier. Compared to 2019 levels, general purpose application
volume in 2021 remained steady or increased for cardholders with above-prime scores and
decreased for cardholders with below-prime or no scores, as shown in Figure 4. The number of
applications for general purpose cards increased further in 2022, totaling over 87 million
applications for mass market issuers, with increases in volume for every credit score tier. The
161
See John McNamara and Margaret Seikel, Why we’re modernizing how we collect credit card data, CFPB, (Aug.
19, 2022), https://content.consumerfinance.gov/about-us/blog/why-were-modernizing-how-we-collect-credit-card-
data/.
162
15 U.S.C. 1616(b) (2012).
163
For more information on the affiliate marketing relationships TPC sites have with issuers, see the 2017 Report,
supra note 3, at 265 to 300.
164
In addition to an issuer’s internal processes, issuers are required to consider an applicant’s ability to pay the
minimum monthly payment on an account prior to opening a credit card account under an open-end (not home-
secured) consumer credit plan or increasing a credit line on such an account. 12 CFR 1026.51(a)(1)(i) (2019).
165
CFPB research on credit applications found that, by the spring of 2021, credit card applications had returned to
pre-pandemic levels. See Éva Nagypál, Special issue brief: The Recovery of Credit Applications to Pre-Pandemic
Levels, CFPB, (July 27, 2021), https://files.consumerfinance.gov/f/documents/cfpb_recovery-of-credit-
applications-pre-pandemic-levels_report_2021-07.pdf.
78 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
near-prime tier saw the greatest percent change, with 21 percent more applications in 2022 than
in 2021. Total general purpose application volume in 2022 reached its highest level since at least
2015, increasing by over 28 million since 2020 and by over almost eight million from 2019.
Increased household spending due to inflation and decreased government support may have
increased demand for credit, which could partially explain the rise in applications in 2022. The
previously discussed industry-wide expansion in marketing expenditure alongside record
reward offers could contribute to recent increases in credit card application volume.
166
FIGURE 4: APPLICATION VOLUME FOR MASS MARKET ISSUERS BY CREDIT SCORE TIER, GENERAL
PURPOSE (MMI)
167
The post-pandemic rebound in retail card application volume in 2021 was smaller in magnitude
than that of general purpose cards. While 2021 retail card application volume increased relative
to 2020 levels, it fell below 2020 levels in 2022. As shown in Figure 5, in 2022, consumers
submitted over 77 million applications for retail cards to mass market issuers, down from over
88 million retail card applications the year prior. Both 2021 and 2022 application volume
increased relative to 2020 levels for consumers with prime credit scores and for those with no
score. Both overall and in every credit score tier except superprime, there were fewer
applications for retail cards than general purpose cards in 2022.
166
See AnnaMaria Andriotis, Banks Spend Big to Boost Credit-Card Sign-Ups, Defying Recession Fears, Wall St. J.,
(Aug. 2, 2022), https://www.wsj.com/articles/banks-spend-big-to-boost-credit-card-sign-ups-defyi ng-recession-
fears-11659432600?mg=prod/com-wsj. See Section 6.1 for more info on rewards offers and sign-up bonuses.
167
The CFPB began separating prime plus from superprime in this report, as such, superprime prior to 2021 includes
both prime plus and superprime consumers.
16M
18M
18M
18M
19M
14M
17M
19M
20M
21M
19M
20M
21M
15M
18M
21M
10M
10M
9M
9M
9M
6M
8M
10M
12M
14M
13M
13M
13M
10M
13M
15M
13M
15M
16M
19M
17M
18M
18M
14M
6M
7M
0
20M
40M
60M
80M
2015 2016 2017 2018 2019 2020
2021
2022
No score Subprime and deep subprime Near-prime Prime Prime plus Superprime
79 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 5: APPLICATION VOLUME FOR MASS MARKET ISSUERS BY CREDIT SCORE TIER, RETAIL
(MMI)
168
A significant share of general purpose and retail applications are now submitted via digital
channels. In 2022, the digital channel accounted for 86 percent of general purpose card
applications and 44 percent of retail card applications. While digital channel application volume
was higher in 2022 than in 2019 for both general purpose and retail cards, the share of card
applications submitted digitally has slightly declined since 2020.
Mobile devices have become increasingly prominent channels for credit card applications, as
most applications for general purpose cards are now submitted via phone or tablet. As shown in
Figure 6, the mobile device channel accounted for 58 percent of new applications for general
purpose cards in 2022, up from 52 percent in 2020 and 56 percent in 2021. However, the share
of consumers applying via mobile devices differs by credit tier—consumers with higher credit
scores submit a smaller proportion of credit card applications using mobile devices than do
consumers with lower credit scores. While over 60 percent of general purpose applications
submitted by consumers with below-prime scores were through mobile devices, the share drops
to under 43 percent for consumers with superprime scores. An increase in digital adoption could
help explain the growing share of mobile applications.
168
The CFPB began separating prime plus from superprime in this report, as such, superprime prior to 2021 includes
both prime plus and superprime consumers.
12M
12M
12M
13M
13M
13M
18M
15M
26M
26M
25M
26M
29M
27M
24M
20M
12M
12M
11M
11M
10M
9M
10M
9M
14M
15M
14M
14M
13M
11M
13M
12M
13M
12M
25M
26M
25M
25M
27M
22M
9M
9M
0
20M
40M
60M
80M
2015 2016 2017 2018 2019 2020 2021 2022
No score Subprime and deep subprime Near-prime Prime Prime plus Superprime
80 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 6: SHARE OF APPLICATIONS SUBMITTED BY MOBILE DEVICES (MMI)
While the mobile application rate remains above pre-pandemic levels for retail card
applications, it has decreased since its peak in 2020. As shown in Figure 6, the mobile channel
accounted for 32 and 28 percent of retail card applications in 2021 and 2022, respectively.
While this number is up from 25 percent in 2019, it is down from a high of 36 percent during the
height of COVID-19 in 2020. The year-over-year decline from 2020 to 2021 and from 2021 to
2022 may reflect the return to in-person business.
169
The increase in mobile applications
relative to pre-pandemic levels represents a continuation of the longer-run trend toward mobile
device applications observed since 2015. As with general purpose applications, the share of retail
card applications submitted via mobile devices increases with each lower credit tier: consumers
with superprime scores submitted nine percent of retail card applications using a mobile device,
compared to over 40 percent of consumers with subprime and unknown scores.
5.1.3 Approvals
Approval rates had been declining year-over-year from 2015 to 2020; however, that trend
reversed in 2021 and 2022. As shown in Figure 7, general purpose approval rates in 2021 and
2022 exceeded 2018, 2019, and 2020 levels. The overall general purpose card approval rate
increased from 36 percent in 2020 to 43 percent in 2021 and 44 percent in 2022. Like general
purpose cards, after dropping in 2020, retail card approval rates increased in 2021 and 2022.
About half of applicants for private label and non-airline or hotel co-brand cards were approved
in 2022, similar to rates last seen before the pandemic.
169
See N.Y. Times, See Reopening Plans and Mask Mandates for All 50 States, (July 1, 2021),
https://www.nytimes.com/interactive/2020/us/states-reopen-map-coronavirus.html.
18%
20%
38%
43%
48%
52%
56%
58%
7%
10%
14%
20%
25%
36%
32%
28%
2015 2016 2017 2018 2019 2020 2021
2022
0%
10%
20%
30%
40%
50%
60%
General purpose Retail
81 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 7: APPROVAL RATE (MMI)
Approval rates vary significantly by credit tier—well over half of credit card applications
submitted by consumers with prime and above-prime are approved, while under one-fifth of
credit card applications submitted by consumers in the subprime and deep subprime credit tiers
were approved. As shown in Figure 8, approval rates for every credit tier except for the subprime
and no score tiers were higher for retail cards than for general purpose cards in 2022. The
overall 2022 retail card approval rate of 50 percent was also higher than the overall 44 percent
approval rate for general purpose cards.
FIGURE 8: APPROVAL RATE BY CREDIT SCORE TIER, 2022 (MMI)
Approval rates vary substantially by application channel but do not tend to vary significantly by
card type. As shown in Figure 9, pre-screen, in-person, and mail channels tend to have the
highest approval rates. Pre-screened solicitations are the channel with the highest approval rate,
as credit card companies use information from credit reporting companies to make pre-screened
offers of credit to consumers whose credit histories meet the criteria selected by the card
46%
44%
42%
42%
41%
36%
43%
44%
50%
51%
50%
48%
47%
41%
46%
50%
2015 2016
2017 2018 2019 2020 2021
2022
0%
10%
20%
30%
40%
50%
60%
General purpose Retail
20%
10%
17%
13%
41%
61%
63%
81%
79%
88%
86%
91%
44%
50%
General purpose Retail
0%
20%
40%
60%
80%
100%
No score Subprime and deep subprime Near-prime Prime Prime plus Superprime Overall
82 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
company.
170
Accordingly, as demonstrated in Figure 9, the 75 percent approval rate for pre-
screened solicitations is over 10 percentage points higher than the channel with the next highest
approval rate. In-person and mail approval rates of approximately 60 percent are comparable to
each other and for both card types. Rates for mobile and digital channels are typically lower but
vary by credit tier.
171
The approval rates for general purpose applications submitted by TPC sites
and mobile devices were each 38 percent, which is six percentage points below the average
overall general purpose approval rate. TPC sites directly facilitated over 6.6 million approvals in
2022. While this number was over 1.8 million more approvals than in 2021 and nearly three
million more approvals than in 2020, it was over half a million less than the all-time high in
2019.
FIGURE 9: APPROVAL RATE BY APPLICATION CHANNEL, 2022 (MMI)
5.1.4 Account origination
The recent upticks in marketing, applications, and approvals led to a significant rebound in
credit card originations in 2021 after the pandemic’s effects in 2020, with substantially more
activity in 2022 for the near-prime to prime plus tiers. American consumers opened more than
80 million general purpose credit cards in both years, as shown in Figure 10. Overall increases
in new account volume (from 72.9 million in 2019 to 87.6 million in 2022) appear to be driven
primarily from increases in new accounts by consumers with lower scores. The superprime tier
170
The credit card company is not required to provide credit cards to consumers who receive pre-screened
solicitations. Consumers must still apply and be approved. Once consumers apply, the card company can review
their application and other information, such as an updated credit report, to determine whether their credit history
still meets the criteria it used to send them the offer and whether they meet any additional criteria (such as sufficient
income to pay the debt) that were in place at the time it made the offer.
171
Mobile is a subset of digital.
75%
63%
60%
60%
64%
42%
33%
38%
28%
38%
General purpose Retail
0%
20%
40%
60%
80%
Pre-screen In-person Mail Digital Mobile-device TPC site
83 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
did not see more new cards in 2022 than in 2019, and for the prime plus tier, 2021 was on par
with 2019. In 2021, consumers with prime scores or below saw one to four million more new
cards in each tier than in 2019, and consumers with prime scores opened an additional two
million accounts in 2022. However, deep subprime originations fell by 1.5 million from 2021 to
2022.
FIGURE 10: ANNUAL NEW ACCOUNT VOLUME, GENERAL PURPOSE (CCP)
In contrast to rising new account volume for general purpose, private label card originations
have generally fallen since 2015, with declining volumes in every credit score tier. Private label
card originations exceeded 46 million in 2015 and remained above 41 million in 2019. However,
by 2022, consumers opened fewer than 30 million new private label cards. All credit score tiers
had fewer new card openings in 2022 than they did in any year between 2013 and 2019, as
shown in Figure 11. Since applications decreased and approval rates for retail cards increased in
recent years, the drop in private label originations appears to be driven more by a lack of
demand than constricting supply. Considering the growth in other payment options like BNPL
at online retailers and increasing originations of general purpose cards, the 2022 drop in new
private label card accounts appears to be a continuation of the decline in private label cards we
observed in our last report.
172
172
See 2021 Report, supra note 3, at 26.
4M
5M
5M
6M
5M
5M
6M
7M
8M
8M
4M
5M
6M
7M
6M
7M
8M
8M
12M
10M
3M
5M
5M
6M
5M
5M
6M
4M
8M
8M
5M
7M
7M
8M
8M
7M
8M
6M
10M
11M
11M
12M
13M
14M
14M
13M
14M
9M
15M
17M
17M
17M
18M
19M
19M
19M
20M
14M
20M
23M
10M
9M
10M
10M
10M
10M
11M
7M
9M
10M
0
20M
40M
60M
80M
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
No score Deep subprime Subprime Near-prime Prime Prime plus Superprime
84 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 11: ANNUAL NEW ACCOUNT VOLUME, PRIVATE LABEL (CCP)
5.1.5 New account credit line
Total credit line on new accounts recovered from its low point in 2020 to reach new nominal
highs but remained below pre-pandemic levels after adjusting for inflation. In 2022, the total
credit line on new accounts was $547.3 billion, more than in any calendar year since at least
2013, as shown in Figure 12. In real terms, using the 2022 purchasing power of the dollar
throughout, more credit was originated each year from 2015 to 2019 than in 2022. The quarterly
total of the credit line on new accounts fell to $87 billion in the second quarter of 2020 and rose
steadily through 2021 and 2022 to reach more than $130 billion per quarter in 2022. However,
the real line with these new accounts remains below historic norms due to the relatively higher
rates of inflation observed in the past two years.
FIGURE 12: QUARTERLY TOTAL CREDIT LINE ON NEW ACCOUNTS, NOMINAL AND INFLATION-ADJUSTED
(CCP)
3M
3M
4M
4M
3M
3M
3M
3M
3M
2M
4M
5M
5M
5M
4M
4M
4M
3M
4M
3M
6M
7M
7M
7M
6M
6M
6M
5M
5M
4M
9M
9M
9M
9M
9M
9M
9M
6M
7M
6M
13M
12M
12M
11M
11M
11M
11M
8M
9M
8M
8M
8M
7M
7M
7M
7M
7M
4M
5M
4M
0
10M
20M
30M
40M
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
No score Deep subprime Subprime Near-prime Prime Prime plus Superprime
$112B
$113B
$126B
$124B
$117B
$119B
$128B
$87B
$128B
$143B
$143B
$159B
$153B
$141B
$142B
$148B
$100B
$136B
$131B
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$0
$30B
$60B
$90B
$120B
$150B
$180B
Credit line on new accounts (nominal) Credit line on new accounts (real)
85 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
General purpose cards accounted for all the growth in new credit line; in contrast, new private
label card line declined during the pandemic and has not yet recovered. Declining new private
label line is in part due to fewer card applications and subsequent originations since approval
rates and average credit line increased over this period. Prior to the pandemic, new private label
credit line averaged roughly $30 billion per quarter, but it has not exceeded $21 billion since the
first quarter of 2020. Meanwhile, new general purpose line increased by 91 percent since 2020.
FIGURE 13: QUARTERLY TOTAL CREDIT LINE ON NEW ACCOUNTS (CCP)
The average credit line on new general purpose accounts remains within the historic range for
consumers in all credit score tiers, with recent increases in total new credit attributable to a
greater number of new accounts. The average new line in 2022 remained near typical nominal
levels slightly above $5,000 and did not change significantly by tier in 2021 and 2022. Issuers
continue to offer much higher credit lines to consumers with better credit scores—new
cardholders with superprime scores received almost $12,000 in available credit in 2022, while
those with near-prime scores could expect less than a fourth of that, $2,750.
$83B
$80B
$95B
$93B
$90B
$93B
$99B
$66B
$107B
$112B
$29B
$33B
$31B
$31B
$27B
$26B
$29B
$21B
$21B
$19B
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$0
$20B
$40B
$60B
$80B
$100B
$120B
$140B
General purpose Private label
86 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 14: QUARTERLY AVERAGE CREDIT LINE ON NEW ACCOUNTS, GENERAL PURPOSE (CCP)
Like general purpose cards, average credit lines on new private label cards remain largely within
their typical range in all credit score tiers. The average new private label card comes with
roughly $2,500 in credit line. Private label cards originate with less than half the credit line of
general purpose cards in the superprime or prime plus tiers. However, private label accounts for
cardholders in the subprime tier and below originate nearly two-thirds of the average new
general purpose credit line. Even during the peak of the pandemic, average new private label
credit lines remained largely unchanged, outside of expected seasonality.
FIGURE 15: QUARTERLY AVERAGE CREDIT LINE ON NEW ACCOUNTS, PRIVATE LABEL (CCP)
$5,233
$5,102
$5,447
$5,436
$5,393
$5,521
$5,181
$4,194
$4,840
$5,473
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Deep subprime Subprime Near-prime Prime
Prime plus Superprime Overall
$1,924
$2,100
$2,081
$2,160
$2,093
$2,173
$2,200
$2,128
$2,151
$2,467
$0
$1,000
$2,000
$3,000
$4,000
$5,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Deep subprime Subprime Near-prime Prime
Prime plus Superprime Overall
87 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
5.2 Existing accounts
General purpose cards continued their long rise in prevalence, while private label cardholding
has become relatively less common. By year-end 2022, there were 548 million open general
purpose card accounts compared to 206 million open private label accounts. General purpose
cards increased 12 percent from December 2019 to reach its highest number since at least 2013.
Over that same period, the number of open private label accounts declined 13 percent overall.
FIGURE 16: QUARTERLY NUMBER OF OPEN CREDIT CARD ACCOUNTS (CCP)
Cardholding is more common among consumers with higher scores, but a record number of
more general purpose cards are held by those with lower scores. Most credit cards of either type
are held by consumers with prime plus scores, followed by those with superprime scores.
Altogether, cards held by consumers with prime and above scores make up 80.6 percent of all
accounts. While every credit tier saw its highest number of general purpose accounts in our data
in 2022, the number of private label accounts held by consumers with subprime and deep
subprime scores remain low following major declines in 2020 and 2021.
389M
407M
419M
442M
453M
464M
488M
486M
515M
548M
219M
217M
226M
229M
251M
248M
237M
215M
213M
206M
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
100M
200M
300M
400M
500M
600M
General purpose Private label
88 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 17: CREDIT CARD ACCOUNTS, YEAR-END 2022 (CCP)
The typical credit card holder has multiple cards, and consumers with higher scores generally
own more cards than those with lower scores. Nearly every person with a score above 800 has a
credit card, while less than half of those with deep subprime scores do. Further, almost two-
thirds of consumers with superprime scores have three cards or more, while only a third of
cardholders with subprime scores have that many. Since consumers often carry more than one
card, credit card issuers compete to acquire and retain “top-of-wallet” status as consumers’
primary method of payment. Issuers must refresh product offerings and provide new benefits
regularly to ensure cardholders reach for their product first at checkout or keep their card as the
default option in a mobile wallet. Issuers depend on their card being consumers’ top-of-wallet
card to maintain interchange revenue, grow interest-incurring balances, and gain marketable
insights on customer spending.
51M
147M
70M
197M
42M
101M 47M
42M
26M27M
4M
0 100M 200M 300M 400M 500M
Private label
General purpose
Superprime Prime plus Prime Near-prime Subprime Deep subprime No score
89 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 18: SHARE OF SCORED CONSUMERS BY NUMBER OF CREDIT CARD ACCOUNTS BY CREDIT
SCORE TIER, YEAR-END 2022 (CCP)
5.2.1 Existing account credit line
The total credit line available to U.S. consumers recovered from a slight pandemic dip in 2020
to reach a new high of $5.1 trillion by the end of 2022 but remains near historical levels after
adjusting for inflation. Inflation-adjusted, total credit line on existing accounts in 2022 was
below the levels seen between 2017 and 2020. This stability in real terms implies that approved
lines shrank relative to consumer spending. Approved lines could have covered 32 percent of
annual personal consumption expenditures from 2016 to 2020, but this ratio dropped to 30
percent in 2021 and 29 percent by 2022.
173
173
See U.S. Bureau of Economic Analysis, Consumer Spending, https://www.bea.gov/resources/learning-
center/what-to-know-consumer-spending (last accessed July 12, 2023).
17%
22%
20%
16%
24%
16%
20%
9%
14%
15%
13%
17%
19%
16%
16%
33%
49%
48%
45%
64%
46%
58%
32%
16%
22%
14%
19%
Deep subprime
Subprime
Near-prime
Prime
Prime plus
Superprime
Overall
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
1 2 3+ None
90 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 19: CREDIT LINE ON EXISTING ACCOUNTS, NOMINAL AND INFLATION-ADJUSTED (CCP)
Credit line by card type shows a flat-to-shrinking private label segment but more movement
among general purpose cards, with record-breaking lines in both 2021 and 2022 ($4.2 trillion
and $4.5 trillion, respectively, as shown in Figure 20). As such, the changes in Figure 19 above
are entirely attributable to shifts in the general purpose credit card market. Private label credit
line has generally remained stable over the past decade and has been declining in real dollars
after adjusting for inflation, providing additional evidence of reduced demand for private label
cards as discussed in the previous section.
FIGURE 20: TOTAL CREDIT LINE ON EXISTING ACCOUNTS (CCP)
Average line per cardholder across all private label and general purpose accounts returned to
steady growth for all tiers following a dip in 2020. In 2022, credit line per cardholder reached
$26,000, surpassing its previous high from 2019. Consumers with superprime scores had more
than $40,000 in average approved lines for the first time. As expected, consumers with lower
credit scores had lower average credit lines. However, credit lines have across tiers, with average
$3.5T
$3.6T
$3.8T
$4.1T
$4.3T
$4.5T
$4.6T
$4.5T
$4.7T
$4.5T
$4.6T
$4.8T
$5.0T
$5.2T
$5.3T $5.4T
$5.2T
$5.0T
$5.1T
2013 2014 2015 2016 2017 2018 2019 2020 2021
2022
$0
$1T
$2T
$3T
$4T
$5T
Credit line (nominal) Credit line (real)
$3.0T
$3.1T
$3.3T
$3.5T
$3.6T
$3.8T
$4.0T
$3.9T
$4.2T
$4.5T
$0.5T
$0.5T
$0.6T
$0.6T
$0.6T
$0.6T
$0.6T
$0.6T
$0.6T
$0.6T
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$0
$1T
$2T
$3T
$4T
$5T
General purpose Private label
91 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
lines 1.5 to 2.2 percent above 2019 levels for cardholders with superprime, near-prime, and
subprime scores, and a recovery to 2019 levels for all other tiers.
FIGURE 21: AVERAGE CREDIT LINE PER CARDHOLDER (CCP)
Per capita differences in credit line partly result from some consumers having more cards than
others, but those with higher scores also have larger limits on each card. General purpose card
limits also have a steeper gradient in line by score: the average superprime general purpose card
had a credit line eight times higher than a deep subprime general purpose card account in 2022.
On the other hand, the average superprime private label card had a credit line just under four
times as high as a deep subprime private label card account in 2022.
FIGURE 22: AVERAGE CREDIT LINE PER ACCOUNT, END OF YEAR 2022 (CCP)
$22K
$22K
$23K
$23K
$24K
$25K
$25K
$24K
$25K
$26K
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$0
$10K
$20K
$30K
$40K
Deep subprime Subprime Near-prime Prime
Prime plus Superprime Overall
$1,521
$998
$2,059
$1,225
$3,067
$1,617
$5,587
$2,486
$9,428
$3,366
$12,529
$3,714
$8,260
$2,867
General purpose Private label
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Deep subprime Subprime Near-prime Prime Prime plus Superprime Overall
92 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
5.2.2 Utilization
Average general purpose card utilization increased in 2022 for cardholders in all credit score
tiers, reversing the pandemic trend of lower utilization observed from 2020 to 2021. Consumers
used 20 percent of their approved credit for general purpose cards in 2022, up from 19 percent
in 2020. Despite overall increases in the total dollar value of credit line available over the past
decade, utilization has been remarkably stable as the portion of credit line that was unused rose
in tandem. The overall decrease in the utilization rate to 19.3 percent in 2020 and 19.2 percent
in 2021 from more than 21.5 percent the four prior years was a historically-large deviation.
FIGURE 23: AVERAGE UTILIZATION RATE BY CREDIT SCORE TIER, GENERAL PURPOSE (CCP)
The share of consumers with below-prime scores who have used 90 percent or more of their
general purpose credit line reached record lows in 2020 but matched record highs by the end of
2022. Since 2013, slightly more than two-fifths of consumers with below-prime scores met or
exceeded this threshold of limited available credit as shown in Figure 24. This measure dropped
to 31.9 percent in the second quarter of 2020 but reached 46.4 percent by the holiday season of
2022. For cardholders with deep subprime or near-prime scores, the share using more than
ninety percent of their credit line were at their highest levels observed in the data (69.1 percent
and 29.9 percent, respectively).
174
174
These rates are about 30 percent lower than what was reported in the 2021 Report, supra note 3, at 80, due to a
prior coding error.
21.0%
21.3%
21.3%
21.5%
21.8%
21.7%
21.6%
19.3%
19.2%
20.7%
2013 2014 2015 2016 2017 2018 2019
2020
2021 2022
0%
20%
40%
60%
80%
100%
Deep subprime Subprime Near-prime Prime
Prime plus Superprime Overall
93 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 24: QUARTERLY SHARE OF BELOW-PRIME CARDHOLDERS WITH AT LEAST 90 PERCENT
UTILIZATION ACROSS ALL CARDS, GENERAL PURPOSE (CCP)
5.2.3 Credit line management
Credit lines on existing accounts are not static. Issuers can increase or decrease them without
consumer consent. The CARD Act’s ability-to-pay requirements restrict credit line increases
(CLIs) to a certain extent, but issuers confront more substantial regulatory restrictions on
repricing existing balances.
175
Previous research published by the CFPB suggests issuers may use
line management to respond to default risk revealed post-origination or changes in nationwide
economic conditions.
176
CREDIT LI NE INCREASE
The end of 2021 showed the highest activity in CLIs among all years with comparable data, with
2022 continuing at elevated rates. The amount of the increase is largely proportional to credit
limit, though cardholders with lower scores experience a lower percentage increase. As shown in
Figure 25, quarterly CLI incidence in 2020 reached 2.5 percent for general purpose cards. Prior
to the pandemic, four percent of accounts received a CLI. CLI rates were steady in 2021, on
average, and increased to an average quarterly incidence of 4.6 percent throughout 2022.
Market-wide, CLIs are most common on middle-tier cards; while near-prime and prime cards
show the highest CLI rates on record, subprime CLIs became notably less common than from
2014 to 2017. Private label credit line increase activity has rebounded to only half of their pre-
175
The ability-to-pay rules require that issuers consider an applicant’s ability to pay the minimum monthly payment
on an account prior to opening a credit card account under an open-end (not home-secured) consumer credit plan or
increasing a credit line on such an account. 12 CFR 1026.51(a)(1)(i). See also 15 U.S.C. § 1665e (2012). Repricing of
existing balance is only allowed under a set of relatively narrow circumstances. See 12 CFR 1026.55(b).
176
See 2017 Report, supra note 3, at 158 to 162.
41%
41%
42%
44%
45%
46%
45%
38%
39%
46%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0%
20%
40%
60%
Deep subprime Subprime Near-prime Below-prime overall
94 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
pandemic levels. In this segment, all tiers below prime plus saw dampened activity relative to
2013 to 2016.
FIGURE 25: QUARTERLY CREDIT LINE INCREASE INCIDENCE, GENERAL PURPOSE (CCP)
Issuer-initiated CLIs, a common part of card issuers’ risk management strategy, have more than
rebounded since falling during the pandemic, with mixed outcomes for consumers. Four-fifths
of CLIs are “proactive” (initiated by the card issuer), while the rest are “reactive” (in response to
a consumer request).
177
Proactive credit line increases (pCLIs) are used by card issuers to
manage risk—issuers often provide higher-risk consumers lower lines at origination and then
increase credit availability after the cardholder exhibits desirable repayment patterns.
178
This
strategy could explain why large issuers have given pCLIs to consumers with mid-tier scores at
double or even triple the rate of the highest and lowest scoring cardholders. However, some
academics have found that consumers keep a fairly consistent utilization rate, even after
changes in total available credit, and suggest that pCLIs may induce increased borrowing and
persistent debt by consumers.
179
Other countries like Canada, Australia, and the United
177
Only about one-third of reactive CLI requests are approved. Very few are denied for ability-to-pay reasons, most
are due to issuers’ underwriting criteria and risk appetite. See 2017 Report, at 155.
178
Issuers have few limits on pCLIs in the first year after account opening. However, after that, most large issuers
need to receive updated income from a consumer, per Office of the Comptroller of the Currency guidance on
modeled income, prior to initiating a pCLI. See 2017 Report, at 158.
179
See Scott Fulford and Scott D. Schuh, Credit Card Utilization and Consumption Over the Life Cycle and Business
Cycle, FRB of Boson Working Paper No. 17-14, (Sep. 2017),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3095890.
3.3%
3.4%
3.8%
4.3%
4.2%
4.2%
4.2%
2.5%
4.9%
4.6%
0%
1%
2%
3%
4%
5%
6%
7%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Deep subprime
Subprime
Near-prime Prime
Prime plus
Superprime
Overall
95 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Kingdom have regulated pCLIs for this reason.
180
However, issuers argue pCLIs also allow them
to provide increased credit access to consumers with lower scores and provide a mechanism for
increasing available credit in times of inflation or in case of emergency. Additionally, consumers
who keep their balances at the same level as prior to the increase often experience a positive
credit score impact as their utilization decreases. While consumers can also ask for a higher
credit limit, typically reflecting increased demand or need for credit, only about one third of
requests result in a reactive credit line increase (rCLI).
181
FIGURE 26: QUARTERLY PROACTIVE CREDIT LINE INCREASE INCIDENCE, GENERAL PURPOSE (Y-14)
CREDIT LI NE DECREASE
The third quarter of 2020 saw a decadal peak in credit line decreases (CLDs) as 1.6 percent of
general purpose accounts saw a decrease in credit line in response to the pandemic, with the
sharpest rise in superprime CLD rates. Before and after the pandemic, a higher percentage of
consumers with below-prime scores experienced CLDs. The annual average incidence of general
purpose card CLDs (1.2 percent) in 2020 were the highest since 2013. The average rate of 0.8
percent for both 2021 and 2022 are in line with pre-pandemic averages from 2015 to 2018. The
COVID-19 pandemic thus appears to only cause a short-lived increase in CLD rates.
180
See, e.g., Canada’s Credit Business Practices Regulations, SOR/2009-257, 6(1). See also Financial Conduct
Authority, New credit card rules introduced by the FCA, (Feb. 27, 2018), https://www.fca.org.uk/news/press-
releases/new-credit-card-rules-introduced-fca.
181
See 2015 Report, at 113.
3.7%
4.4%
4.0%
4.5%
4.4%
2.6%
5.2%
4.6%
2015 2016 2017 2018 2019 2020 2021 2022
0%
2%
4%
6%
8%
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
96 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 27: QUARTERLY CREDIT LINE DECREASE INCIDENCE, GENERAL PURPOSE (CCP)
Private label cards experience CLDs three times as often as general purpose accounts, with
particularly elevated frequencies for deep subprime cards. For private label cards, CLDs grew
from an average incidence of 2.1 percent in 2019 to a 4.4 percent annualized rate in the third
quarter of 2020. The median cut to available credit line is large, between 30 and 70 percent of
available credit. The average rates of 2.6 percent and 2.3 percent for 2021 and 2022 are still
lower than the 2020 average of three percent. For this segment as well, the peak (of 5.7 percent
annualized) in subprime CLDs in the third quarter of 2020 was the most significant deviation
from historical and seasonal trends.
FIGURE 28: QUARTERLY CREDIT LINE DECREASE INCIDENCE, PRIVATE LABEL (CCP)
ACCOUNT CLOSURE
As noted in the 2021 Report, roughly two percent of accounts are closed each year. The data do
not distinguish between voluntary—initiated by the consumer—and involuntary—initiated by
the creditor—closures. Figures 29 and 30 show that for both general purpose and private label
1.2%
1.0%
0.7%
0.9%
0.8%
0.8%
0.9%
1.0%
0.7%
0.8%
0%
0.5%
1.0%
1.5%
2.0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Deep subprime Subprime Near-prime
Prime Prime plus Superprime
Overall
1.7%
1.8%
1.5%
2.0%
1.9%
1.9%
2.0%
2.2%
2.2%
2.4%
0%
2%
4%
6%
8%
10%
12%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Deep subprime Subprime Near-prime
Prime
Prime plus
Superprime
Overall
97 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
accounts, closures increased in 2020, leveled off, and then increased again in 2022. Closures are
most common for cardholders with deep subprime credit scores. This result may be automatic
based on servicing data insights and delinquency trends; at the point an account is closed by an
issuer, the consumer may be delinquent, which adversely affects their credit scores.
FIGURE 29: QUARTERLY ACCOUNT CLOSURE INCIDENCE, GENERAL PURPOSE (CCP)
FIGURE 30: QUARTERLY ACCOUNT CLOSURE INCIDENCE, PRIVATE LABEL (CCP)
0%
1%
2%
3%
4%
5%
6%
7%
2013 2014 2015 2016 2017 2018 2019 2020
2021
2022
Deep subprime Subprime Near-prime
Prime Prime plus Superprime
0%
1%
2%
3%
4%
5%
6%
2013
2014 2015 2016 2017 2018 2019 2020 2021 2022
Deep subprime Subprime Near-prime
Prime Prime plus Superprime
98 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
6. Practices of credit card
issuers
In the CARD Act, Congress directs the CFPB to review “the terms of credit card agreements and
the practices of credit card issuers” and “the effectiveness of disclosure of terms, fees, and other
expenses of credit card plans.”
182
In this section, we examine the following: rewards, installment
plans, balance transfers, cash advances, over-limit transactions, dispute resolution, account
servicing, and debt collection. For each, we highlight its prevalence, cost, and any new
developments.
6.1 Rewards
Rewards programs remain a key feature of credit cards, affecting consumer product choice and
serving as a competitive battleground for issuers. Rewards frequently drive originations, as
consumers report rewards and sign-up offers are the top factors influencing their shopping
decisions.
183
After a consumer chooses to open a card, rewards continue to play a major role,
often determining card choice at point-of-sale.
184
The fight for both new customers and “top-of-
wallet” status for existing cardholders has intensified competition on rewards offerings in the
past two years.
185
With a decrease in credit card debt during the pandemic,
186
issuers turned to
increased rewards earning rates and record welcome offers to incentivize applications and grow
balances. Many cardholders have benefited from this competition in credit card rewards, but the
earnings are not evenly distributed; higher score, transacting accounts earning a
disproportionate share, as discussed in Section 6.1 above. Additionally, some researchers
182
15 U.S.C. § 1616(a)(1)-(2).
183
J.D. Power, Death of Airline Miles Rewards Cards Greatly Exaggerated (June 23, 2021),
https://www.jdpower.com/business/resources/death-airline-miles-rewards-cards-greatly-exaggerated.
184
Cardholder Engagement Is A Matter Of Loyalty, PYMNTS (Nov. 24, 2022),
https://www.pymnts.com/news/loyalty-and-rewards-news/2020/cardholder-engagement-is-a-matter-of-loyalty/.
185
In 2022, six of the biggest issuers reported spending a combined $68 billion on them in 2022, more than 40
percent more than in 2019. See Telis Demos, Credit Card Rewards Are Heading Toward a Crisis (Apr. 2023),
https://www.wsj.com/articles/the-pandemic-didnt-end-card-rewards-it-made-them-stronger-20fd03c9.
186
See Section 3.
99 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
suggest non-card (or cash) users end up paying more in prices to subsidize the interchange rates
funding the credit card rewards ecosystem.
187
This report builds on findings from prior reports, using new data to provide a more complete
picture of the rewards landscape. The first CARD report in 2013 identified concerns around
transparency in rewards offers, noting that disclosures are often highly complex, with detailed
rules regarding the eligibility for sign-up bonuses, the value of earned points, the rate at which
they are earned, and the rules governing their forfeiture.
188
In the 2015 Report, the CFPB
examined the terms of rewards programs, finding that consumers rarely have access to the full
terms of rewards programs prior to applying for a credit card.
189
In the three reports since, we’ve
continued tracking the prevalence of rewards alongside their cost and further developments.
190
In this section, we present new data on the value of rewards balances, redemptions, forfeiture,
and sign-up bonuses to benchmark growth and provide readers with context for examining how
rewards fit within the greater consumer credit card market.
6.1.1 Prevalence
Rewards cards continue to make up most accounts and spending on credit cards, but they are
less prevalent in credit tiers with lower scores. Three-fourths of general purpose accounts at
mass market issuers in 2022 were rewards cards, unchanged since 2020. While rewards cards
have become more common for consumers in lower score tiers, only half of accounts associated
with subprime scores had the ability to earn rewards, compared to 85 percent of superprime
cardholders. After increasing from 2015 through 2019, the share of general purpose credit card
spending accounted for by rewards cards has largely leveled off at above 90 percent. That
plateau is true overall and specifically for cardholders with scores above 720, but growth in
spending on rewards cards has notably continued for cardholders with lower credit scores. By
the end of 2022, even accountholders with deep subprime scores put more than 65 percent of
187
This may be the case when merchants charge customers the same price, regardless of payment method (e.g., does
not offer a cash discount). One paper found, “on average, each cash-using household pays $149 to card-using
households and each card-using household receives $1,133 from cash users every year.” See Scott Schuh, Oz Shy, and
Joanna Stavins, Who Gains and Who Loses from Credit Card Payments? Theory and Calibrations, Federal Reserve
Bank of Boston (2010), https://www.bostonfed.org/publications/public-policy-discussion-paper/2010/who-gains-
and-who-loses-from-credit-card-payments-theory-and-calibrations.aspx.
188
2013 Report, supra note 3, at 82.
189
2015 Report, supra note 3, at 230.
190
2017 Report, supra note 3, at 59; 2019 Report, supra note 3, at 99; 2021 Report, supra note 3, at 87.
100 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
their credit card purchase volume on rewards cards, and cardholders with near-prime scores
used rewards cards for over three-fourths of their total credit card purchase volume.
FIGURE 1: ANNUAL SHARE OF PURCHASE VOLUME ON REWARDS CARDS, GENERAL PURPOSE (Y-
14+)
Rewards balances have risen over the past four years, with higher-score cardholders amassing
larger balances of unspent rewards.
191
For cardholders with rewards accounts, total rewards
balances at the end of 2022 were more than $33 billion, up 40 percent relative to the fourth
quarter of 2019. On average, each reward account has over $150 in unspent value associated
with a major issuer’s branded rewards program. Rewards balances are higher for those with
higher credit scores; those in the prime plus and superprime tiers appear to be banking
increasingly more rewards relative to those with below-prime scores. Consumers amassed
greater rewards in 2021 as spending increased relative to rewards redemptions and still had not
redeemed their earned rewards by the end of the period studied.
191
Rewards balances are defined as the value of rewards earned but not yet redeemed or forfeited, excluding
proprietary rewards managed by a co-brand partner and not available to the issuer.
84%
85%
86%
88%
90% 91% 91% 91%
2015 2016
2017
2018 2019 2020 2021
2022
0%
20%
40%
60%
80%
100%
Deep subprime Subprime
Near-prime
Prime Superprime and prime plus Overall
101 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 2: QUARTERLY DOLLAR VALUE OF AVERAGE REWARDS BALANCES, GENERAL PURPOSE (MMI)
6.1.2 Cost
The dollar value of redeemed rewards increased in 2021 and again in 2022, with the vast
majority of redemptions occurring for cardholders with scores above 720. Based on available
data for general purpose cards, issuers reported that consumers redeemed almost $35 billion in
rewards. This estimate excludes the considerable value of points or miles earned on co-brand
cards with separate loyalty programs, like airlines and hotels. The average rewards-earning
account redeemed $167 in 2022, a 44 percent increase from 2020 levels of $115. Rewards
redemptions are fairly in-line with the distributions of accounts across credit score tiers but are
somewhat skewed toward those in higher score tiers: accounts with prime plus and above scores
redeem about 80 percent of rewards and represent 67 percent of general purpose rewards cards
at mass market issuers. Below-prime cardholders make up 14 percent of rewards accounts yet
account for only six percent of rewards redemptions. The value of rewards redeemed pales in
comparison to the cost of revolving debt, and, particularly for cardholders with lower scores
facing higher interest rates and fees, may obscure the true cost of borrowing.
192
192
See Section 4.4 for more information on the net cost of credit.
$122
$126
$133
$150
$156
2019 2020 2021 2022
$0
$50
$100
$150
$200
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
102 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 3: DOLLAR VALUE OF REWARDS REDEEMED, GENERAL PURPOSE (MMI)
The value of reward redemption varies widely based on the type of reward and the reward
program, with terms that can be complex for some consumers.
193
Cash back redemption is the
most straightforward, as statement credits directly reduce balances for cardholders, while points
and miles are more likely to be used for travel purchases like hotels or flights. The “cost-per-
point” of points and miles redemptions to issuers vary significantly; for example, companies
may provide more value for some flights at certain dates and times than others. Points and miles
reward values may change at the issuer’s or program manager’s discretion. At times, limited-
time redemption promotions or across-the-board devaluations may occur without advance
notice to cardholders. Over the past decade, a growing industry has emerged to direct
consumers to more lucrative redemptions, highlighting the complexity and range of rewards
programs.
194
Rewards forfeiture has declined over the past three years but remains relatively more common
for cardholders with subprime credit scores. In some cases, cardholders can lose access to
accrued rewards through account closure or reward point expiration. Each quarter, about four
percent of accounts forfeit some previously earned rewards, translating to about $500 million in
rewards per year. During the pandemic, the forfeiture rate declined from 4.8 percent (associated
with $166 million in forfeited rewards value) in the fourth quarter of 2019 to 3.2 percent (with
$115 million in rewards forfeited) in the second quarter of 2022. It is highest for consumers with
193
Trade groups provided comments that cardholders find rewards program easy to use and navigate. See ABA, CBA,
and NAFCU comment at 8 through 10. However, some consumers submitted comments to the contrary. See Melissa
Holt and David Mandel comments.
194
Jamie Lauren Keiles, The Man Who Turned Credit-Card Points Into an Empire, The New York Times (Jan. 5,
2021), https://www.nytimes.com/2021/01/05/magazine/points-guy-travel-rewards.html.
$9.1B
$8.8B
$11.1B
$13.4B
$9.8B
$8.9B
$11.5B
$14.9B
$2.9B
$2.5B
$3.1B
$4.2B
$1.3B
$1.1B
$1.3B
$2.0B
$0
$5B
$10B
$15B
$20B
$25B
$30B
$35B
2019 2020 2021 2022
Superprime
Prime plus Prime Below-prime
103 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
subprime scores, then followed by those in the superprime score tier. When rewards are
forfeited, the dollar loss averages $10 to $30 per account.
FIGURE 4: QUARTERLY REWARDS FORFEITURE INCIDENCE, GENERAL PURPOSE (MMI)
Issuer rewards forfeiture practices vary in their relative customer friendliness, so much so that
one state is taking steps to protect rewards balances from revocation. Many consumers lose all
rewards balances upon account closure (either by the issuer or cardholder), and some issuers
place expiration dates on rewards. At least one issuer revokes all rewards earned in a cycle in the
event of a late payment and charges consumers an optional fee for reinstatement after curing the
delinquency.
195
Alternatively, another company credits the account or sends a physical check
with the equivalent cash-back value of rewards in the case of account closure. In 2021, the state
of New York passed a law providing a 90-day grace period for the use of credit card reward
points before an account is modified, canceled, closed, or terminated and requiring notification
at least 45 days prior to major changes in rewards program terms.
196
The CFPB will continue to
monitor developments in rewards program disclosures and forfeiture practices given the
importance of these benefits in consumers’ credit card decision-making and the dollar value of
these rewards.
195
See, e.g., American Express, Why were Membership Rewards® points forfeited and how can I reinstate them?
(June 10, 2023), https://www.americanexpress.com/us/customer-service/faq.membership-rewards-points-
forfeiture.html#:~:text=There%20is%20a%20%2435%20fee,the%20program%20Terms%20and%20Conditions.
196
Jeremy McLaughlin, Forthcoming New York Law Expands Protections for Credit Card Reward Points, The
National Law Review (July 14, 2022), https://www.natlawreview.com/article/forthcoming-new-york -law-expands-
protections-credit-card-reward-points.
4.8%
4.0%
3.5%
3.7%
2019
2020
2021 2022
0%
2%
4%
6%
8%
Subprime and deep subprime
Near-prime
Prime Prime plus
Superprime Overall
104 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
6.1.3 Developments
Credit card sign-up bonuses play an increasing role in competition between issuers,
representing a growing share of rewards earned, as such, we discuss them as a separate topic
below. Sign-up bonuses are lump-sum incentives offered to consumers for a certain level of
spending within a set number of months upon opening the card represented seven percent of
total rewards earned but declined to 5.3 percent in 2020. It grew back to 7.7 percent in 2021 and
later reached 9.1 percent of total reward earnings in 2022. Almost one-in-ten dollars earned in
rewards overall, and closer to one-in-five for consumers with below-prime scores, is now
associated with these welcome offers.
In 2022, about one-fourth of cardholders eligible for a sign-up bonus failed to meet the
requirements to earn the lump sum. Typically, this occurs if a cardholder does not make at least
a minimum spending threshold set for earning the bonus. Not receiving the expected sign-up
bonus can spur consumer protests. In our 2015 report, we noted that sign-up bonuses were the
single largest driver of complaints to the CFPB regarding rewards credit cards in general.
197
Additionally, the failure of issuers to honor their promised credit card account bonuses can
cause consumer harm: in 2023, the CFPB took action against Bank of America for withholding
credit card rewards associated with these sign-up bonuses.
198
For the 73 percent of eligible cardholders who did earn the lump sum, they received a sign-up
bonus with an average value of $326. The share of eligible accounts earning rewards bonuses
has remained similar across tiers and remained stable since 2019. However, the average value of
these bonuses has increased over the past four years. As shown in Figure 5, the value of the
average welcome offer earned has increased by $50, or almost 20 percent, since 2019 with
prime plus cardholders seeing the greatest increase in value.
197
2015 report, supra note 3, at 230.
198
CFPB, CFPB Takes Action Against Bank of America for Illegally Charging Junk Fees, Withholding Credit Card
Rewards, and Opening Fake Accounts (July 11, 2023), https://www.consumerfinance.gov/about-
us/newsroom/bank-of-america-for-illegally-chargi ng-junk-fees-withholding-credit-card-rewards-opening-fake-
accounts/.
105 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 5: AVERAGE DOLLAR VALUE OF REWARDS BONUS EARNED, GENERAL PURPOSE (MMI)
If an issuer that manages a rewards program goes out of businesses, cardholders remain liable
for their debts but may lose their earned rewards. In the CFPB’s 2021 Report, we detailed new
forms of rewards from five issuers that offered cryptocurrency, student loan-related, and
climate-focused rewards products. At the time of writing, two of the five are no longer taking
applications.
199
In 2022, the cryptocurrency market faced existential challenges with the failures
of FTX and BlockFi, among others.
200
Other companies that offered increased earning rates for
specific types of purchases (like wine or fitness) have been unable to achieve adequate scale to
compete with two-to-five percent cash back or points offers by major issuers.
201
Considering
many Fintechs use credit card-as-a-service models and manage the rewards programs
separately from the underlying loans,
202
it is possible cardholders will lose their accumulated
rewards when the account is closed by an issuer after the failure of a partner but will still be
required to pay off debt on the card issued by the sponsor bank. This situation could trigger
confusion and frustration among consumers after rewards forfeiture and might lead to worse
repayment outcomes and confusion regarding customers’ account servicing rights.
199
See Aspiration, What do I need to know about Aspiration Zero being discontinued,
https://my.aspiration.com/faq/Aspiration-Zero%3EWhat-do-I-need-to-know-about-Aspiration-Zero-being-
discontinued- (last accessed May 15, 2023). See also Sara Rathner, BlockFi Rewards Credit Card Unavailable
Following Bankruptcy Filing, NerdWallet (Nov. 30, 2022), https://www.nerdwallet.com/article/credit-
cards/blockfi-rewards-credit-card-unavailable-following-bank ruptcy-filing.
200
See Jae Bratton, Crypto Credit Cards, Once a White-Hot Trend, Have Fizzled, NerdWallet (Mar. 23, 2023),
https://www.nerdwallet.com/article/credit-cards/crypto-credit-cards-have-started-to-fizzle.
201
See Craig Joseph, Niche Credit Card Rewards Were Having a Moment — What Happened?, NerdWallet (May 17,
2023), https://www.nerdwallet.com/article/credit-cards/niche-credit-card-rewards-face-growing-pains.
202
See Section 7.2.1.
$276
$272
$303
$326
2019 2020 2021
2022
$0
$100
$200
$300
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
106 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
An emerging theme in new products is rewards that attempt to reduce the costs of future
homeownership for current renters. In partnership with Wells Fargo, the Bilt card offers
rewards on rent payments made with their co-brand product without having to pay the two to
five percent processing fee landlords typically charge for a credit card payment.
203
Bilt points are
worth more when redeemed for a down payment than for other redemptions options.
204
Rocket
Mortgage announced a new product in 2023 with five percent back when used on closing costs
and two percent on mortgage balances.
205
Major issuers continue to introduce additional benefits associated with exclusive access to
events, products, or services either in lieu of or in addition to flat rewards earning rates but may
restrict their use to a limited pool of cardholders. Credit card companies have stepped in as the
gatekeeper of scarce resources like concert tickets,
206
lounge access,
207
and exclusive restaurant
reservations.
208
This gives consumers who meet the underwriting standards for a premium card
the option to “skip the line.” With the return of travel and entertainment spending since the
pandemic’s onset, consumer demand for these experiences often exceeds supply. Some issuers
are restricting benefits to only those with ever-more-expensive credit cards to preserve exclusive
status.
6.2 Installment plans
Credit card installment plans (“IPs”) provide cardholders with the option to repay credit card
purchases in fixed monthly installments using their card’s existing line of credit. At the time of
203
Press Release, Wells Fargo Partners with Bilt Rewards and Mastercard to Issue the First Credit Card that Earns
Points on Rent payments without the Transaction Fee (Mar. 28, 2022),
https://www.businesswire.com/news/home/20220328005120/en/Wells-Fargo-Partners-with-Bilt-Rewards-and-
Mastercard-to-Issue-the-First-Credit-Card-that-Earns-Points-on-Rent-payments-without-the-Transaction-Fee.
204
Bilt, How do redeem points towards a down payment, https://support.biltrewards.com/hc/en-
us/articles/10377953401869-How-do-I-redeem-points-towards-a-down-payment- (l ast accessed July 19, 2023).
205
Press Release, Swipe or Tap Your Way To A Home: New Rocket Visa Signature Card Is The First Credit Card
Designed with Homeownership in Mind (Mar. 28, 2023), https://www.prnewswire.com/news-releases/swipe-or-
tap-your-way-to-a-home-new-rocket-visa-signature-card-is-the-first-credit-card-designed-wi th-homeownership-in-
mind-301783076.html.
206
Capital One, Capital One Announces Exclusive Taylor Swift Tour Presale (Nov. 14, 2022),
https://www.capitalone.com/about/newsroom/taylor-swift-the-eras-tour-presale/.
207
Anderw Kunesh, Reminder: Big changes to who can access Delta Sky Clubs start Thursday, NerdWallet (Feb. 1,
2023), https://thepointsguy.com/news/sky-club-access-changes/.
208
Victoria Walker, An American Express Airport Lounge in the Sky? Not Quite., The New York Times (May 14,
2023), https://www.nytimes.com/2023/05/14/realestate/american-express-centurion-lounge-nyc.html.
107 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
writing, five of the ten largest general purpose credit card issuers offer this feature in some
capacity. Each of these programs was launched between 2017 and 2021, coinciding with the
increasing popularity of “buy now, pay later” (“BNPL”) loans.
Most installment plans include amortized interest charges or fixed finance charges and are a
part of the overall credit card account balance but are subject to a separate set of terms and
conditions. For the duration of the installment plan, the monthly payment (generally including a
portion of the principal amount plus a financing fee), is added to a cardholder’s minimum
monthly payment. If a cardholder pays off their entire outstanding balance, excluding the
amount outstanding on the installment plan, the prevailing issuer practice is that they will
maintain their grace period, not incurring interest on non-IP purchases.
209
Credit card issuers
may offer installment plans on a qualifying item, a group of qualifying items, or a qualifying
amount.
The credit card installment plans examined in this report are provided as a feature exclusive to
certain existing cardholders, with restrictions that vary across issuers.
210
The eligibility for these
plans and the corresponding terms are determined at the discretion of the card issuers. Issuers
consider factors such as creditworthiness, amount of available credit, and account history,
among others, to determine cardholder eligibility for installment plans. In addition to eligibility
restrictions, card issuers also impose restrictions on the types of transactions that qualify for
installment plans. Installment plan program terms vary across issuers, but usually require a
minimum transaction amount (typically $25, $50, or $100) and exclude certain types of
transactions, such as cash or cash equivalent purchases and fees owed to the issuer.
211
Installment plans bear some similarities to BNPL loans, as both products offer repayment
through a series of fixed payments.
212
However, there are a few key differences between these
209
See, e.g., Citi, Cardmember Agreement for Citi Rewards+® Card,
https://www.citi.com/CRD/PDF/CMA/cardAgreement/CMA_PID408.pdf. See also JP Morgan Chase,
Cardmember Agreement for Visa Signature or Infinite/Mastercard World Elite Agreement,
https://www.chase.com/content/feed/public/creditcards/cma/Chase/COL00094.pdf.
210
Some credit card issuers also offer a feature that allows cardholders to take a loan on their existing credit line and
repay it in installments. These are distinct from the installment plans defined in this section, as they are usually cash
loans that are deposited into a cardholder’s bank account and have higher minimum amounts (typically $500).
These loan products are not considered installment plans for the purposes of this report.
211
See, e.g., JP Morgan Chase, MyChasePlan, https://www.chase.com/personal/credit-cards/mychaseplan-hub.
212
BNPL is a form of credit that allows a consumer to split a retail transaction into smaller, interest-free installments
and repay over time. The typical BNPL structure divides a $5o to $1,000 purchase into four equal installments, with
the first installment paid as a down payment due at checkout, and the next three due in two-week intervals over six
weeks. CFPB, Buy Now, Pay Later: Market trends and consumer impacts (BNPL Report), (Sept. 2022),
https://files.consumerfinance.gov/f/documents/cfpb_buy-now-pay-later-market-trends-consumer-
impacts_report_2022-09.pdf.
108 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
products. First, most IPs include a fee with each installment, while BNPL loans are generally
“interest free” and do not charge fees unless a consumer fails to pay on time. Further, while
BNPL loans are often offered at the point-of-sale, IPs are typically offered after a consumer has
made a purchase with their credit card. Thus, although IPs may contribute to the same
overextension risks inherent in credit card usage, IPs may not present the same risk of “loan
stacking” that may be associated with standalone pay-in-four type products.
213
This section builds on previously reported observations about IPs using novel data.
214
We
analyze the use, cost, and availability of credit card installment plans using data the CFPB
solicited from several large credit card issuers with installment plan offerings in 2021 and 2022
as well as a review of publicly-available plan term documents.
6.2.1 Prevalence
The prevalence of credit card installment plans has exhibited a steady rise over 2021 and 2022.
As shown in Figure 6, in each quarter in 2022, the number of new installment plans grew by at
least 60 percent year-over-year to reach 10 million in 2022. This upward trend in new plan
volume occurred across all credit tiers, with cardholders in most tiers nearly doubling the
number of new plans they opened between 2021 and 2022. The dollar amount covered by IPs
also sharply increased, more than doubling in 2022 to reach $9 billion.
213
BNPL loan stacking is the risk that a borrower takes out concurrent BNPL loans at different lenders and is unable
to repay some or all of them. BNPL sustained usage is the risk that frequent BNPL usage may threaten borrowers’
ability to meet non-BNPL financial obligations, such as rent, utilities, mortgages, auto loans, and student loans. See
BNPL Report, supra note 213, for more details on these risks.
214
See 2019 Report, supra note 3, at 177.
109 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 6: QUARTERLY NUMBER OF NEW INSTALLMENT PLANS (IP)
Credit card issuers are offering more options for consumers to pay for purchases in installments.
Credit card installment plan offerings were initially only available for prior purchases. However,
some issuers have introduced installment plans at the point-of-sale (POS) for specific
merchants, potentially in response to the growing popularity of BNPL.
215
In 2022, about one in
ten new plans were created at the time of purchase, rather than after the fact.
Installment plans can vary in duration from a few months to over a year. When cardholders
initiate a new installment plan, issuers often present multiple duration options, which can vary
based on the consumer’s account history and creditworthiness. Figure 7 shows that, on average,
shorter plan durations tend to be more common than longer durations. The distribution of plan
durations varies among different credit tiers, with cardholders with higher credit scores
displaying a greater propensity to enroll in shorter-duration plans. Among the plans issued to
cardholders with superprime scores, only seven percent have a duration of 13 months or longer.
In contrast, these extended duration plans account for 27 percent of the plans issued to
cardholders with subprime and deep subprime scores. The inclination toward longer plans
among cardholders with below-prime scores may stem from a preference for the lower monthly
payments associated with longer plans. Another possibility is that issuers only provide
cardholders with lower credit scores the option to enroll in plans with longer durations,
potentially due to concerns over the consumer’s ability to pay the new, higher monthly amount.
215
Examples of IP offered at point-of-sale: American Express Plan It on Delta Air Lines, Citi Flex Pay on Amazon.
193K
255K
322K
426K
393K
461K
570K
608K
343K
485K
596K
744K
693K
863K
1.12M
1.14M
213K
322K
382K
450K
420K
577K
807K
846K
0
0.5M
1.0M
1.5M
2.0M
2.5M
3.0M
2021Q1
2021Q2
2021Q3 2021Q4 2022Q1 2022Q2 2022Q3
2022Q4
Subprime and deep subprime Near-prime Prime Prime plus
Superprime
110 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 7: NEW INSTALLMENT PLANS BY DURATION, 2022 (IP)
The average IP amount increased from 2021 to 2022, but less so in higher credit score tiers. The
average dollar amount applied to installment plans was $871 in 2021 and $953 in 2022. As
illustrated in Figure 8, the average plan amount increases with credit quality, as cardholders
with above-prime scores report an average plan amount at least twice that of cardholders with
subprime scores.
FIGURE 8: QUARTERLY AVERAGE AMOUNT APPLIED TO NEW INSTALLMENT PLANS (IP)
Users of installment plans tend to be younger than the overall population of cardholders at
surveyed issuers and more similar in age to BNPL users. This was true in both 2021 and 2022.
While 25 percent of cardholders belong to the 65 and older category, only nine percent of new
installment plans are issued to individuals within that age group. In contrast, the two younger
age groups are overrepresented among IP users, when compared to all cardholders. For
35%
40%
43%
50%
59%
50%
38%
39%
39%
37%
33%
37%
27%
21%
18%
13%
7%
13%
Subprime and
deep subprime
Near-prime
Prime
Prime plus
Superprime
Overall
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
Six months or less
Seven to 12 months 13 months or longer
$869
$879
$902
$842
$911
$972
$998
$919
2021 2022
$0
$200
$400
$600
$800
$1,000
$1,200
Superprime Prime plus
Prime Near-prime
Subprime and deep subprime Overall
111 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
reference, the age distribution observed for the BNPL borrower base skews younger, but more
toward Millennials than Gen Z.
216
FIGURE 9: NEW INSTALLMENT PLANS BY CARDHOLDER AGE, ISSUERS OFFERING INSTALLMENT PLANS,
2022 (IP, MMI)
Only a small fraction of consumers at a limited number of issuers have used the installment
payment feature. Around 0.2 percent of all cardholders made use of the installment plan feature
at least once in 2022, nearly double the adoption rate seen in 2021. As depicted in Figure 10,
credit quality was negatively associated with the propensity to acquire an installment plan in
2022. Although most new installment plans are issued to cardholders with above-prime scores,
these accounts exhibited a lower likelihood of initiating an installment plan compared to
cardholders with lower credit scores.
216
See BNPL Report, supra note 212, at 70.
3%
5%
73%
86%
25%
9%
All cardholders
IP users
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Below 25 25 to 64 65 and Older
112 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 10: SHARE OF CARDHOLDERS AT ISSUERS OFFERING INSTALLMENT PLANS WITH ONE OR MORE
NEW INSTALLMENT PLANS (IP)
The typical installment plan user in 2022 opened exactly one plan, with a smaller share of
adopters enrolling in the feature multiple times. Fewer superprime cardholders acquired
multiple plans in 2022 than cardholders in other score tiers. In all score tiers, more users
opened three or more installment plans than opened two, suggesting while most users only have
one plan, a minority may be heavy users of this feature. Some issuers may impose a limit on the
number of concurrent plans users can initiate, but most cardholders remain well below this
threshold.
FIGURE 11: NUMBER OF INSTALLMENT PLANS ASSOCIATED WITH CARDHOLDER ACCOUNT, 2022 (IP)
217
217
This measures installment plans created at any point in the calendar year—not necessarily concurrently.
0.15%
0.16%
0.17%
0.16%
0.07%
0.12%
0.34%
0.31%
0.30%
0.26%
0.14%
0.22%
Subprime and
deep subprime
Near-prime Prime Prime plus Superprime Overall
0%
0.10%
0.20%
0.30%
2021 2022
57%
56%
54%
54%
60%
56%
19%
19%
19%
19%
19%
19%
24%
25%
27%
27%
21%
25%
Subprime and
deep subprime
Near Prime
Prime
Prime Plus
Superprime
Overall
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1 Installment Plan 2 Installment Plans 3+ Installment Plans
113 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Seventeen percent of cardholders with an installment plan had a utilization rate of 90 percent or
more, similar to rates seen on credit cards more generally. This was highest for consumers with
lower scores. Approximately half of accounts with IPs that are associated with subprime and
deep subprime scores approached or exceeded maxing out their credit line, about the same rate
as seen market-wide for those with or without plans.
218
When a cardholder has an active installment plan, the required monthly payment associated
with that plan is combined with the standard minimum payment, resulting in a higher total due.
Consumers are required to make this payment by the specified due date to avoid incurring a late
fee. Overall, 2.7 percent of installment plan payments were not paid on time during 2022.
However, there is notable variation observed across credit tiers. The rate of missed payments
ranges from as low as 0.3 percent for cardholders with superprime scores to as high as 18.8
percent for cardholders with subprime scores. This disparity suggests that some cardholders
with lower credit scores may encounter greater challenges in meeting the higher minimum
payment amount.
The extent to which issuers reevaluate consumers’ ability to meet minimum payments when
offering IPs is uncertain. Regulation Z requires issuers to consider ability to pay when setting
the minimum payment.
219
Since installment plan payments are added to this minimum
payment, the CFPB inquired about how ability to pay is considered in determining installment
plan eligibility. Information solicited from a few card issuers suggests that since installment
plans are offered through an existing line of credit, ability to pay the IP is rarely, if ever,
considered when determining eligibility. At most, consumers’ ability to pay may be considered
when determining the duration of a given installment plan or how issuers market these features.
These responses indicate that issuers may suggest or approve installment plans to consumers
without considering their ability to meet the increased minimum payment amount.
6.2.2 Cost
The average cost of installment plans is significantly lower than the cost a consumer would face
by revolving the same amount at their non-promotional purchase APR. This is true overall and
within each credit tier. To evaluate the cost of installment plans for consumers, we calculate the
implied interest rate offered at the point of origination, representing the cost cardholders would
incur if they were to complete their installment plan as initially contracted, without any early or
218
See Section 6.2.
219
See Reg Z, 12 C.F.R. 1026.5-1026.16; 1026.51-1026.61.
114 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
missed payments.
220
The average annualized offered cost of installment plans in 2022 was 5.8
percent, lower than the average APR on revolving purchases made with general purpose credit
cards, which was 21.5 percent. Figure 12 shows that consumers with higher scores have a lower
cost associated with their installment plans. It also shows that, for each credit tier, the cost of
installment plans is significantly lower than the cost of revolving credit card debt. Part of this
difference may be due to issuers offering promotional pricing on new installment plans
alongside the launch of this novel feature. It is worth noting that this chart displays averages and
there is substantial variation in offered cost across issuers and over time.
FIGURE 12: OFFERED COST OF INSTALLMENT PLANS AND AVERAGE APR BY CREDIT TIER, 2022 (IP)
This method of assessing cost does have certain limitations since the actual net cost or benefit is
contingent upon the alternative course of action a cardholder would have pursued if they had
not opted for the installment plan. For instance, one category of installment users may consist of
cardholders who already carry a balance without a grace period. In this case, their alternative
action would have been to add the purchase amount to the existing revolving balance. The
installment plan could prove beneficial for them, as the annualized cost of financing charges is
lower than the APR, leading to some savings. The cardholder in this case may also benefit from
paying off more of their balance through regular minimum payments. However, it should be
noted that an installment plan would also increase the minimum payment due, potentially
raising the likelihood of a late payment. Therefore, the net cost or benefit to these consumers is
unclear.
220
This rate is calculated using the average plan amount, average financing charges, and average plan duration. It is
presented as an annualized figure.
9.6%
9.6%
8.3%
6.1%
3.4%
5.8%
25.1%
24.6%
23.8%
21.9%
19.6%
21.5%
Subprime and
deep subprime
Near-prime Prime Prime plus Superprime Overall
0%
5%
10%
15%
20%
25%
Installment plans cost Average non-promotional APR
115 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Installment plans are likely cheaper for people who only borrow on their credit card
occasionally. For example, consider a cardholder who typically pays off their credit card balance
in full but is facing a large expense where they may prefer a longer repayment period. In this
scenario, an installment plan would help the consumer retain the grace period and incur a lower
cost of credit than if they were to revolve the purchase amount. In this case, assuming this
consumer can meet the minimum payment, an installment plan would likely provide a net
benefit. Issuers offering these plans do not appear to currently charge prepayment penalties. If a
consumer desires to pay off an IP early, issuers typically allow prepayment if the cardholder
makes a payment for the current balance on the credit card.
221
Lastly, there are likely consumers who would have simply paid off the balance of their purchase
if not for the installment plan, an alternative that would have no financing charges. On paper,
this would make the installment plan appear to be associated with a net cost to the consumer.
However, providing the flexibility to pay over time may provide additional liquidity or other
benefits to the consumer.
6.3 Balance transfers
Balance transfer offers enable consumers to potentially reduce the cost of credit card debt.
222
Some credit cards offer promotional rates for balance transfers to incentivize consumers to
apply for or increase their use of a credit card account. Generally, balance transfers allow users
to shift existing balances from other credit products and other credit cards onto the new one;
consumers are typically offered a lower interest rate on the transferred balance (often zero
percent) but are also typically required to pay an upfront fee assessed as a share of the
transferred balance. In addition to transferring debt from another credit card, most balance
221
See e.g., American Express, Pay It Plan It® Frequently Asked Questions,
https://www.americanexpress.com/us/credit-cards/features-benefits/plan-
it/faq/#:~:text=If%20you%20pay%20off%20a,in%20your%20current%20billing%20period (last accessed Aug. 1,
2023); Chase, My Chase Plan FAQs, https://www.chase.com/personal/credit-cards/mychaseplan-
hub/faqs#:~:text=You%20can%20pay%20your%20plan,can%20pay%20your%20current%20balance (last accessed
Aug. 1, 2023).
222
One RFI commenter wrote that balance transfers could "better support the financial security and protection of
low-income consumers" and provides a list of regulatory changes they suggest would make balance transfers less
costly and more user-friendly, including a ban on “retroactive interest,” interest calculators to enable consumers to
see whether a balance transfer will result in significant savings, and automated consumer alerts when a promotional
period is ending. See Neighborhood Trust Financial Partners Comment Letter, at 1-2.
116 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
transfer offers allow consumers to pay off other loans and bills.
223
By the conclusion of the
promotional period, if the consumer does not execute another balance transfer or has not repaid
the balance, the remainder of the balance becomes subject to the higher non-promotional
interest rate. In a high interest rate environment, balance transfer offers can be particularly
valuable to cardholders committed to paying down debt during the promotional period.
6.3.1 Prevalence
Balance transfers became significantly less common during the pandemic but appear to be
returning to 2019 levels. Following four years of growth, balance transfer volume fell 36 percent
year-over-year to $35 billion in 2020, and quarterly balance transfer incidence fell from 0.9
percent in 2019 to 0.4 percent at year’s end in 2020. Since 2020, balance transfer incidence has
risen to 0.7 percent per quarter, and volume rebounded to $53 billion in 2022 but remains
somewhat below 2019 levels after adjusting for inflation (see Figure 13). Reductions in balance
transfer prevalence and volume during the pandemic may have been driven by a reduction in
offers or approved balance transfer amounts as issuers looked to limit exposure to potential
future losses amidst economic uncertainty.
224
A review of recent marketing data shows a
decrease in average promotion duration and fewer direct mail balance transfer offers. These
results suggest issuers may be pulling back on balance transfer offers, possibly due to rising
interest rates and the potential for consumer financial stress as borrowing costs increase.
225
Prevalence growth may also be somewhat limited by a lack of awareness, particularly among
younger consumers; one survey found that 37 percent of cardholders with a balance are unaware
of the balance transfer feature, including 50 percent of Millennials and 61 percent of Gen
Zers.
226
Beyond a lack of awareness, some consumers may fail to take action because they
miscalculate the financial benefits or incorrectly assume they would be denied access to balance
transfer offers.
223
Many transactions effectuated using a “convenience check” may also be treated as balance transfers by issuers.
However, not all such transactions are so treated; depending on how it is used, some may be treated similarly to cash
advances. The CFPB therefore excludes convenience check transactions from this analysis (and from its analysis of
cash advances in Section 6.4), acknowledging that this likely excludes at least some volume that may be identical or
nearl y identical from the consumer perspective.
224
See AnnaMaria Andriotis & Veronica Dagher, Credit-Card Balance Transfers Are Harder to Come By, Wall St. J.
(June 6, 2020), https://www.wsj.com/articles/credit-card-balance-transfers-are-harder-to-come-by-11591435801.
225
Data provided by Competiscan.
226
Erica Sandberg, Survey: More Americans are carrying debt, and many of them don’t know their APRs, Bankrate
(Jan. 10, 2023), https://www.bankrate.com/finance/credit-cards/more-americans-carrying-debt-and-many-dont-
know-apr/; Cheyenne DeVon, This credit card debt payoff strategy may sound ‘too good to be true,’ but it could
save you thousands, CNBC (Mar. 21, 2023), https://www.cnbc.com/2023/03/21/what-is-a-credit-card-balance-
transfer.html.
117 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 13: QUARTERLY BALANCE TRANSFER VOLUME, NOMINAL AND INFLATION-ADJUSTED (Y-14+)
Balance transfers are almost exclusively used by cardholders with prime, prime plus, and
superprime credit scores, as shown in Figure 14. In 2021 and 2022, consumers with prime or
better credit scores accounted for more than 98 percent of balance transfer volume, consistent
with our prior report. Primarily, this is because balance transfer offers are typically available
only to applicants with higher credit scores.
227
FIGURE 14: QUARTERLY BALANCE TRANSFER INCIDENCE, GENERAL PURPOSE (Y-14+)
Transfers have become larger, on average, since our last report. Balance transfers for
cardholders with superprime and prime plus scores averaged roughly $6,000 in the fourth
quarter of 2022, up from $5,600. Balance transfers by cardholders with prime scores averaged
227
See Brianna McGurran, Bad Credit? Here’s What You Need to Know About Balance Transfers, Experian (Nov. 30,
2019), https://www.experian.com/blogs/ask-experian/can-i-get-a-balance-transfe r-card-with-bad-credit/.
$10.0B
$11.6B
$12.5B
$12.6B
$14.6B
$6.6B
$10.9B
$14.2B
$12.6B
$14.3B
$15.2B
$14.9B
$16.9B
$7.6B
$11.6B
2015 2016 2017 2018 2019 2020 2021 2022
$0
$3B
$6B
$9B
$12B
$15B
$18B
Balance transfer volume (nominal) Balance transfer volume (real)
0.9%
0.9%
0.9%
0.8%
0.9%
0.4%
0.6%
0.7%
2015 2016 2017 2018 2019 2020 2021 2022
0%
0.5%
1.0%
1.5%
Deep subprime Subprime Near-prime
Prime Superprime and prime plus Overall
118 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
about $4,700 in the fourth quarter of 2022, up from just over $4,500 in the same quarter of
2021. Increases in the average size of balance transfers could be driven by larger consumer
requests after increased spending given inflation or larger issuer-approved amounts.
6.3.2 Cost
While the net cost associated with balance transfers depends both on the terms provided by the
issuer and how consumers take advantage of the offer, upfront fees as a share of the transferred
balance have decreased and promotional interest rates remain low. Balance transfers generally
incur an initial fee, followed by a low interest rate on the transferred balance for a set period or
until the balance is repaid.
228
Measured as a percentage of the amount that cardholders transfer,
the average fee decreased from 3.0 percent in 2020 to 2.8 percent in 2022. Consumers use
balance transfers to switch to a new card, often doing so to take advantage of low promotional
interest rates: more than 95 percent of credit card solicitations sent to new prospects included
an introductory zero percent balance transfer rate in 2021 and 2022.
229
For example, a
cardholder who transfers a $5,000 balance from a card where they were revolving the balance at
25 percent APR might pay a fee of 2.8 percent of the balance ($140) upfront, but due to the
0zeropercent balance transfer APR they would save nearly $1,250 per year in interest if they
otherwise would have paid only the minimum payment due each month on their prior card
during the new card’s promotional period. Depending on the duration of the promotion and the
interest rate differential, as well as the consumer’s repayment behavior, savings from balance
transfers can be significantly higher than the upfront cost of the initial balance transfer fee.
Besides the initial fee and interest, consumers may also incur costs associated with the loss of a
grace period on new purchases when making a balance transfer, which can result in an increase
in interest charges on other balances. Cardholders who make purchases on a card that carries a
transferred balance typically do not benefit from a grace period on new purchases, even if they
repay the full amount of new purchases each month. For example, a consumer who routinely
spends around $500 on a credit card each month and pays that balance in full would normally
benefit from a grace period. However if they spent the same amount on a card with a transferred
balance, the consumer would typically instead incur interest charges on their monthly $500
spending at the card’s retail APR rate from the date of each purchase, even if the transferred
228
Some issuers offer introductory no fee balance transfers for new cards, but this does not appear to be a common
practice in the industry.
229
Data provided by Competiscan.
119 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
balance is subject to a zero percent interest rate.
230
It would be prudent for consumers in this
situation to use a separate card for new purchases while they pay down the transferred balance,
rather than adding new purchases to the card with the transferred balance. While transacting
accounts represent only a minority of all accounts that take advantage of balance transfers, as
noted in a prior report, most of these formerly transacting cardholders went on to make
purchases before the balance transfer was paid, incurring interest charges on those new
purchases and increasing the effective cost of the transfer.
231
6.4 Cash advances
The cash advance feature of many general purpose credit cards allows consumers to obtain cash
or cash equivalents using a portion of their card’s credit line (20 percent of the line is common),
sometimes called the “cash line.”
232
Unlike balance transfers, cash advances are available to any
consumer with a card that has the feature, assuming their cash credit line has not been reached.
Cash advances are usually subject to a higher interest rate than other purchases and typically
begin accruing interest immediately, even for transacting accounts otherwise under a grace
period.
Consumers can access cash advances through a variety of means; ATM withdrawals may be the
most well-known form of cash advance, but they are not the only one. Issuers may treat certain
credit card purchases as cash advances; this can include such uses as the purchase of chips at a
casino, gold at a bank, foreign currency, traveler’s checks, gift cards, prepaid cards, convenience
checks, virtual currencies, and peer-to-peer transfers.
233
In some cases, when a consumer links a
230
Some issuers permit consumers to enjoy a grace period on new purchases while revolving a transferred balance
during the promotional period, but the prevailing practice appears to be that revolving balance transfers does
eliminate the grace period on regular purchases. Issuers are required to provide certain disclosures to consumers
which include information regarding the potential loss of a grace period when balances are not paid in full. 12 C.F.R.
§ 1026.6(b)(2)(v). Issuer disclosures on balance transfers show that some issuers have revised their applicable grace
period policies. These disclosures show that some issuers now allow consumers to retain their grace period while
revolving a transferred balance so long as they pay the balance generated by new purchases in full each month.
Although issuers lose some interest revenue from this type of change, consumers stand to benefit from balance
transfer costs being clearer. In addition, issuers may realize some benefits. The decreased cost of new purchases may
cause increased use of the card for such purchases. In addition, the issuer may avoid any customer service costs
associated with the prevailing grace period policy on balance transfers. See 2017 Report, supra note 3, at 193.
231
See 2015 Report, supra note 3, at 126; see also 2017 Report, supra note 3, at 191 to 193.
232
To the CFPB’s knowledge, some private label cards provide a cash advance feature at the point of sale, but the
practice is not common and does not fall within the scope of this section.
233
See, e.g., Capital One, What is a cash advance on a credit card?, CapitalOne.com (last accessed May 18, 2023),
https://www.capitalone.com/learn-grow/money-management/cash-advance/. See also Taylor Medine, What Are
120 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
credit card to a deposit account in order to cover overdrafts on the latter, the credit card issuer
will treat the overdraft as a cash advance.
234
6.4.1 Prevalence
Cash advance volumes fell sharply during the pandemic and, by 2022, recovered to nominal pre-
pandemic levels but remained lower when accounting for inflation. Prior to the pandemic, cash
advance volume averaged roughly $3 billion per quarter with some seasonal fluctuations,
typically showing slightly higher volumes in the third quarter of each year. As shown in Figure
15 below, the second quarter of 2020 saw cash advance volume decline to less than $2 billion
before rising gradually to about $3.6 billion by the fourth quarter of 2022. One explanation for
the return of cash advance volume may be the expiration of measures aimed at mitigating the
economic impact of COVID-19, such as economic stimulus payments, tax credits, and enhanced
unemployment benefits, which met some of the need consumers may otherwise have had for
cash during the pandemic. Consumer savings increased during the pandemic but now appears
to be back to historical levels, which may be contributing to increased demand for cash
advances.
235
‘Cash-Like’ Credit Card Transactions?, The Balance (Apr. 20, 2022), https://www.thebalancemoney.com/what-are-
cash-like-credit-card-transactions-5185391. Many transactions effectuated using a “convenience check” may also be
treated as cash advances by issuers. However, not all such transactions are so treated; depending on how it is used,
some may be treated similarly to balance transfers. The CFPB therefore excludes convenience check transactions
from this analysis (and from its analysis of balance transfers in Section 6.3), acknowledging that this likely excludes
at least some volume that may be identical or nearly identical from the consumer perspective.
234
See, e.g., Fifth Third Bank, Fifth Third Bank Card Agreement for Mastercard and Visa Accounts,
https://files.consumerfinance.gov/a/assets/credit-card-
agreements/pdf/QCCA/FIFTH_THIRD_BANK_NATIONAL_ ASSOCIATION/18157-consumer-card-agreement.pdf.
. See also Wells Fargo, Wells Fargo Active Cash Credit Card Account Agreement,
https://www.wellsfargo.com/credit-cards/agreements/active-cash -agreement/.
235
Personal savings rates reached record highs during the pandemic, but have since fallen to below 5 percent, a level
not seen since 2009. See Fed. Rsrv. Bank of St. Louis, Personal Saving Rate,
https://fred.stlouisfed.org/series/PSAVERT.
121 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 15: QUARTERLY CASH ADVANCE VOLUME, GENERAL PURPOSE (Y-14+)
Cash advance usage has rebounded somewhat for cardholders in all credit score tiers since the
decline in the second quarter of 2020, somewhat reversing a previous trend away from cash
advances. Cash advance incidence had been declining between 2015 and 2020, particularly in
the below-prime market segment, as shown in Figure 16. Since cash advance volumes were
steady during this time, the gradual decline in incidence of the cash advance feature is likely due
to an increase in the number of credit cards in circulation. Since our last report, cash advance
usage has increased, but remains below pre-pandemic levels. Cash advance incidence is
relatively uniform across credit score tiers, except for consumers with superprime and prime
plus scores who use cash advances markedly less than all other cardholders.
FIGURE 16: QUARTERLY CASH ADVANCE INCIDENCE, GENERAL PURPOSE (Y-14+)
The average cash advance line is greater for cardholders with higher scores. Superprime
cardholders average $3,000 per card, while below-prime score tiers average $1,000 or less.
Partly these differences are a function of higher average overall credit lines for higher score
cardholders, resulting in higher cash advance lines, but some of the differences are also due to
$3.4B
$3.3B
$3.3B
$3.5B
$3.4B
$2.5B
$3.1B
$3.6B
$4.3B
$4.1B
$4.0B
$4.1B
$4.0B
$2.9B
$3.3B
2015 2016 2017 2018 2019 2020 2021 2022
$0
$1B
$2B
$3B
$4B
Cash advance volume (nominal) Cash advance volume (real)
3.4%
3.0%
2.7%
2.5%
2.5%
1.9%
2.1%
2.3%
2015 2016 2017 2018 2019 2020 2021 2022
0%
2%
4%
6%
8%
Deep subprime Subprime Near-prime
Prime Superprime and prime plus Overall
122 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
utilization. Cardholders may use the cash advance feature in an amount that is the smaller of
either the remaining available line or the maximum cash advance line on the card. Given that
utilization rate for cards held by consumers in below-prime tiers tends to be high, cash advances
are likely more limited by the remaining card balance than the cash advance line amount.
6.4.2 Cost
Cash advance costs depend on the amount advanced, upfront fees, interest rates, and the timing
of repayment.
236
Fee structures can be relatively complex, with some card agreements
stipulating different cash advance fee percentages and minimum fee amounts for different cash
advance transactions, such as lower fees for ATM transactions and higher fees for cash
equivalents like casino chips.
237
Minimum fixed fee amounts for cash advances charged under a
two-way pricing structure, such as “$10 or 5%,” can translate to high cash advance fee ratios for
cardholders who take a small dollar amount cash advance. This is more often the case for
cardholders with little remaining available credit on their cards. For this reason, cash advance
fee ratios tend to be higher for cardholders in lower score tiers. Cash advance APRs are typically
higher than purchase APRs, and these transactions are not usually subject to any kind of grace
period, meaning they begin accruing interest at that higher APR at the point that the cash
advance is taken, even if the cardholder pays their balance in full every month.
238
Cash advance fees overall moved in line with usage, falling in 2020 before recovering to
approach pre-pandemic levels in 2022.
239
Fee volumes had been stable prior to the pandemic,
totaling just under $750 million per year for issuers in the Y-14+ data. In 2020, due to declines
in usage, cash advance fee volume fell to roughly $550 million, a decline of nearly 27 percent. As
usage returned, cash advance fees totaled $635 million in 2021 and $717 million in 2022. As a
236
One RFI commenter expressed frustration that cash advance APRs may be higher, but their payments were not
being allocated to the higher rate balances first. See John Mitchell Comment Letter, at 1. Other RFI commenters
raised concerns regarding the high cost of cash advance fees and lack of clear disclosure of those fees. See James
Jacobson Comment Letter; Lyn Strangstad Comment Letter; Du Ng Comment Letter; v L Comment Letter (CFPB-
2023-0009-2734).
237
See, e.g., U.S. Bank, Cardmember Agreement for U.S. Bank National Association Visa® and Mastercard®
Classic, Gold and Platinum Accounts,
https://applications.usbank.com/oad/teamsite/decisioning/usbank/docs/global_default/FR006213482_03_USB.p
df.
238
Indirect costs to cardholders such as interest on balances from purchases that would otherwise be treated as
interest free due to a grace period are not included in calculations of cash advance fee costs but remain an important
consideration.
239
See Section 4.3.3 for more data on cash advance fees over time.
123 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
share of volume, cash advance fees have averaged between 5.1 and 5.6 percent in every quarter
since mid-2015.
6.4.3 Developments
With the explosive growth in sports betting over the past five years, more consumers may find
themselves surprised by an unexpected cash advance fee and the associated interest when
linking their credit card to an online operator. In 2018, the Supreme Court struck down a federal
law that banned sports betting in most of the country and gave states the right to legalize it.
240
At the time of report writing, 33 states and the District of Columbia offered legal sports betting.
241
One in five consumers have personally bet money on sports, and while most of these still
report their betting was with family and friends, online methods like apps now represent a
significant channel.
242
Some issuers decline credit card transactions with online wagering
companies;
243
others treat them as cash advances.
244
Cardholders, especially those betting for
the first time, may not grasp the difference in using their credit card in a sportsbook app
compared to a ride share or food delivery service; consumer complaints to the CFPB after being
charged a cash advance fee for online gambling have increased in recent years. In some cases,
consumers allege they were charged a separate cash advance fee for each wager, with no alert or
warning that such use would result in additional charges. In other cases, consumers disputed
the transactions because they were unaware that using a credit card for online gambling could
be treated as a cash advance. Due to the risks associated with gambling using high-cost credit,
some states and other countries have banned the use of credit cards for online gambling.
245
240
Adam Liptak & Kevin Draper, Supreme Court Ruling Favors Sports Betting, New York Times (May 14, 2018),
https://www.nytimes.com/2018/05/14/us/politics/supreme-court-sports-be tti ng-new-jersey.html.
241
Eric Lipton & Kevin Draper, First Came the Sports Betting Boom. Now Comes the Backlash., New York Times
(May 13, 2023), https://www.nytimes.com/2023/05/13/sports/online-sports-gambling-regul ations.h tml .
242
John Gramlich, As more states legalize the practice, 19% of U.S. adults say they have bet money on sports in the
past year, Pew Research Center (Sep. 14, 2022), https://www.pewresearch.org/short-reads/2022/09/14/as-more-
states-legalize-the-practice-19-of-u-s-adults-say-they-have-bet-money-on-sp orts-in-the-past-year/.
243
Why was my deposit declined?, Fanduel, https://support.fanduel.com/s/article/Why-Was-My-Deposit-Declined-
sportsbook (last accessed June 13, 2023).
244
See, e.g., JPMorgan Chase, Visa Cardmember Agreement, https://files.consumerfinance.gov/a/assets/credit-card-
agreements/pdf/QCCA/JPMORGAN_CHASE_BANK_NATIONAL_ASSOCIATION/Visa_Agreement_(PDF)_-
_COL00095.pdf.
245
Chauncey Crail, Why You Shouldn’t Use A Credit Card For Sports Betting, Nasdaq (Jan. 20, 2023),
https://www.nasdaq.com/articles/why-you-shouldnt-use-a-credit-card-for-sp orts-betting.
124 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
6.5 Over-limit transactions
Over-limit transactions refer to any extension of credit by a card issuer to complete a transaction
that causes a consumer’s credit card account balance to exceed the credit limit.
246
A card issuer
may permit over-limit transactions to occur, and the prevalence of over-limit transactions
suggests they do, but over-limit fees are now virtually non-existent due to certain restrictions
put in place by the CARD Act. While over-limit fees are regulated, the timing of repayment of
over-limit balances is not. Some issuers may require cardholders to pay over-limit amounts as
part of their required minimum payment when billed in their statement. Others may not require
immediate payment of the over-limit amount and allow consumers to continue using the card
while exceeding the limit as a courtesy, potentially raising concerns over cardholders’ ability to
repay the amount borrowed under provisions in Regulation Z.
247
6.5.1 Prevalence
The prevalence of over-limit transactions increased in 2022 to reach 15 percent of accounts in
the Y-14 dataset in a quarter, the highest mark since at least 2015, following a decline in
incidence in 2020. Prior to the passage of the CARD Act, in the fourth quarter of 2008, 16.4
percent of accounts had one or more over-limit instances.
248
Over-limit transactions tend to be
more common among lower-score cardholders since these cardholders typically have lower
credit limits and higher credit utilization than higher-score cardholders, making it more likely
that even a modest purchase might exceed their credit limit. Recent changes in incidence are
also driven by accounts with subprime scores. Over-limit transactions tend to be more common
among lower-score cardholders since these cardholders typically have lower credit limits and
higher credit utilization than higher-score cardholders, making it more likely that even a modest
purchase might exceed their credit limit. Superprime and prime plus score cardholders may also
make purchases that exceed their credit limits, but this happens infrequently due to their
typically greater amount of available credit.
Josh Butler, Australian gamblers to be banned from using credit cards for online betting, The Guardian (Apr. 27,
2023), https://www.theguardian.com/australia-news/2023/apr/27/australian-gamblers-to-be-banned-from-using-
credit-cards-for-online-betti ng.
246
12 C.F.R. § 1026.56(a).
247
12 CFR 1026.51(a)(1)(i).
248
2013 Card Report, at 20-21.
125 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 17: QUARTERLY OVER-LIMIT INCIDENCE, GENERAL PURPOSE (Y-14)
6.5.2 Cost
Despite the increase in the prevalence of over-limit transactions, over-limit fees remain almost
nonexistent. The CARD Act implemented restrictions on the over-limit fees assessed when a
consumer exceeds their assigned credit line. Per the Act, issuers may only charge such fees if the
consumer expressly opts in to permit over-limit transactions.
249
The 2015 Report showed that
over-limit fees, considered collectively, have steadily declined in prevalence since 2008.
250
Subsequent reports found that over-limit fees, common prior to the implementation of the
CARD Act, have remained almost nonexistent in recent years, a trend that has continued
through 2022.
251
6.6 Dispute resolution
Federal laws protect consumers in cases of billing errors on or unauthorized use of their credit
cards.
252
Dispute resolution is the process through which a cardholder requests that their credit
249
15 U.S.C. § 1637(k) (2012); see also 12 C.F.R. § 1026.56 (2013).
250
See 2015 Report, supra note 3, at 71 to 72.
251
Section 3.3.5 of the 2017 Report notes that many issuers appear to have simply ceased assessing over-limit fees
altogether, rather than maintain an opt-in regime. See 2017 Report, supra note 3, at 96 to 97.
252
The Fair Credit Billing Act, enacted and incorporated into TILA in 1974, includes substantive protections for credit
card users who have billing errors. See 12 C.F.R. § 1026.13(a)-(b). If a consumer files a billing error notice, a creditor
is required to investigate the alleged error, send certain notifications to the consumer, and refund any amount found
12%
12%
12%
14%
14%
10%
11%
15%
2015 2016 2017 2018 2019 2020 2021 2022
0%
20%
40%
60%
80%
100%
Subprime and deep subprime Near-prime
Prime Prime plus
Superprime Overall
126 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
card company remove an incorrect or fraudulent charge from their bill. During the pandemic,
dispute volume rose given the surge of travel-related cancellations, supply-chain delays, or
failures to deliver, and a reported increase in fraud attacks.
253
Given the rise in dispute volume
and increase in chargebacks, or credits awarded through the dispute resolution process, the
financial impact of disputes on many merchants grew. Visa blamed a rise in “friendly fraud,” or
disputes on purchases that were authorized and correctly billed.
254
Chargebacks for products or
services purchased and received by the cardholder may increase prices for other consumers as
merchants work to recover their costs.
After adjusting for the growth in purchases, increased dispute rates drove much of the rise in
chargebacks. In 2022, cardholders at major issuers disputed almost $10 billion in purchases and
received $6 billion in chargebacks. Dispute volume rose 50 percent from 2019 levels of $6.5
billion, while chargebacks increased over 80 percent from $3.2 billion over the same period.
After a spike in the second quarter of 2020, disputes and associated chargebacks fell in the
remainder of that year. In 2019, consumers disputed about $3.02 out of every $1,000 spent and
received $1.49 in return; in 2022, they contested $3.40 and got $2.03. During the pandemic,
cardholders became more accustomed to disputing transactions, partly due to the increase in
travel-related cancellations.
255
At the same time, updates to issuers’ apps and online portals over
the past few years have made it easier for cardholders to question a charge. Quarterly volume
in error as well as any related charges that accrued. See 12 C.F.R. § 1026.13(c), (e), and (f). TILA’s implementing
Regulation Z defines unauthorized use as “the use of a credit card by a person, other than the cardholder, who does
not have actual, implied, or apparent authority for such use, and from which the cardholder receives no benefit.” 12
C.F.R. § 1026.12(b)(1)(i).
253
Christopher Elliott, How to file a credit card dispute for your canceled vacation- and win, Washington Post (Apr.
8, 2020), https://www.washingtonpost.com/lifestyle/travel/how-to-file-a-credit-card-dispute-for-your-canceled-
vacation--and-win/2020/04/08/316e7b7e-7807-11ea-b6ff-597f170df8f8_story.html; Emma Fletcher, Pandemic
purchases lead to record reports of unreceived goods, Federal Trade Commission (Jul. 1, 2020),
https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2020/07/pandemic-purchases-lead-record-
reports-unreceived-goods; AnnaMaria Andriotis & Orla McCaffrey, Borrower, Beware: Credit-Card Fraud
Attempts Rise During the Coronavirus Crisis, Wall Street Journal (May 27, 2020),
https://www.wsj.com/articles/borrower-beware-credit-card-fraud-attempts-rise-during-the-coronavirus-crisis-
11590571800?mg=prod/com-wsj.
254
Nathan Bomey, Credit card charge disputes on the rise as consumers cheat businesses, Axios (Dec. 9, 2022),
https://www.axios.com/2022/12/09/credit-card-fraud-chargebacks-visa. Accordingly, Visa implemented new
guidelines in April 2023 called the “Compelling Evidence Rule 3.0 (CE3.0)” that work to combat these types of
charges by providing merchants a framework for disputing fraud claims for card-not-present transactions where the
consumer was logged in or otherwise showed proof of identity. Compelling Evidence 3.0 Merchant Readiness, VISA
(Mar. 2023), https://usa.visa.com/content/dam/VCOM/regional/na/us/support-legal/documents/compelling-
evidence-3.0-merchant-readiness-mar2023.pdf.
255
Christopher Elliot, How to file a credit card dispute for your canceled vacation- and win, Washington Post (Apr.
8, 2020), https://www.washingtonpost.com/lifestyle/travel/how-to-file-a-credit-card-dispute-for-your-canceled-
vacation--and-win/2020/04/08/316e7b7e-7807-11ea-b6ff-597f170df8f8_story.html.
127 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
then grew from mid-2021 through 2022 as consumers spent more.
256
Chargebacks appear to be
increasing faster than disputes as a greater share of disputes are being decided in consumers’
favor at higher average amounts.
FIGURE 18: QUARTERLY DISPUTE AND CHARGEBACK VOLUME AS A PERCENTAGE OF PURCHASE
VOLUME (MMI)
Consumers with higher scores have marginally higher approval rates for disputes on both general
purpose and retail cards, and retail cardholders are less likely to receive credits in response to
disputes than on general purpose accounts.
General purpose cards represent more than 85
percent of disputes by dollar volume in 2022, with retail cards accounting for the remainder.
Consumers won 60 percent of disputes on general purpose cards in 2022, compared to 2019,
when consumers won less than 50 percent of disputes. On retail cards, the chargeback dollar
amount was only about one-fourth of the disputed purchase volume. Across card types,
cardholders with superprime scores receive credit at a rate 10 percentage points higher than
accounts with subprime or deep subprime scores.
256
For more information on purchase volume, see Section 3.1.
0.29%
0.66%
0.33%
0.32%
0.32%
0.15%
0.45%
0.20%
0.19%
0.19%
2019 2020 2021 2022
0%
0.2%
0.4%
0.6%
Disputes Chargebacks
128 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 19: ANNUAL CHARGEBACK DOLLAR AMOUNT AS A SHARE OF DISPUTED PURCHASE VOLUME,
2022 (MMI)
Since the pandemic, the average chargeback amount has increased and remained high, with
higher scored cardholders receiving larger credits than those with lower scores. The average
value of a credit in response to a dispute has been about $200 on general purpose and retail
cards since 2020, a 27 percent increase from 2019 levels. Accountholders with scores above 720
typically received $211 per successful dispute; issuers credited accounts with scores at or below
620 with an average of $124 per chargeback. These differences likely stem from the positive
correlation between purchase volume and credit score, discussed in Section 3.
FIGURE 20: AVERAGE CHARGEBACK AMOUNT (MMI)
Violations of Regulation Z’s billing error resolution provisions are one of the most common
issues identified by the CFPB in assessments of credit card account management operations.
Certain entities have been identified as failing to send acknowledgement of a billing error notice
within 30 days, resolve the dispute within two billing cycles, conduct reasonable investigations,
56%
16%
61%
20%
62%
23%
65%
24%
69%
27%
66%
23%
General purpose Retail
0%
25%
50%
75%
Subprime and deep subprime Near-prime Prime Prime plus Superprime Overall
$157
$200
$193
$200
2019 2020 2021 2022
$0
$50
$100
$150
$200
Subprime and deep subprime Near-prime
Prime Superprime and prime plus
Overall
129 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
or provide explanations when determining no billing error occurred.
257
In 2023, the CFPB
reached a settlement to resolve allegations that Citizens Bank failed to reasonably investigate
and resolve billing error notices and claims of unauthorized use by making customers jump
through unnecessary and burdensome hoops, violating the Truth in Lending Act and its
implementing Regulation Z.
258
On the merchant side of the dispute process, the FTC and the
State of Florida filed suit against Chargebacks911 in 2023, alleging that the “chargeback
mitigation” company used unfair techniques to prevent consumers from successfully winning
chargeback disputes.
259
6.7 Account servicing
Consumer adoption of digital account servicing tools grew partially in response to the disruption
caused by the pandemic, and our data show those behaviors have persisted through 2022. Bank
branch closures, shortened hours, and social distancing may have incentivized consumers to use
online or mobile tools to make payments, check balances or deposit checks. Additionally, mail
delays may have encouraged some people to more frequently opt for electronic statements than
in pre-pandemic periods. While many of the effects of the pandemic have dissipated, most
indicators of digital account servicing show continued use as consumers continue to find value
in these tools.
260
However, data also show that despite the pandemic, some cardholders
continue to interact with banks via traditional non-digital channels. Some cardholders appear
concerned by digital servicing developments, opting out of certain forms of information sharing
or expressing discomfort with certain uses of AI in account servicing.
261
The CFPB continues to
257
CFPB, Supervisory Highlights, Issue 28, at 12 and 13 (Fall 2022),
https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-28_2022-11.pdf; Claire Tsosie,
When Credit Card Disputes Become ‘Friendly Fraud’, Nerdwallet (Jun. 30, 2023),
https://www.nerdwallet.com/article/credit-cards/you-can-dispute-credit-card-purchases-but-should-you.
258
CFPB, CFPB Action to Require Citizens Bank to Pay $9 Million Penalty for Unlawful Credit Card Servicing (May
23, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-action-require-citizens-bank-pay-9-
million-unlawful-credi t-card-servicing/.
259
FTC, FTC, Florida Attorney General Sue Chargebacks911 for Thwarting Consumers Who Were Trying to Reverse
Disputed Credit Card Charges, (Apr. 12, 2023), https://www.ftc.gov/news-events/news/press-
releases/2023/04/ftc-florida-attorney-general-sue-chargebacks911-thwarting-consumers-who-were-trying-reverse-
disputed.
260
See Comment Letter CFPB-2023-0009-0084-A1.
261
One commenter expressed concern that many consumers who interact with their accounts digitally are not
receiving mandatory disclosures because they are not reviewing statements in that channel. See Comment Letter
CFPB-2023-0009-0090. Many commenters expressed frustration that customer service automation can lead to long
delays and an inability to resolve some account issues. See, e.g., Ann Brainard Comment Letter, Larry Ulrey
130 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
monitor the use of AI by financial institutions to ensure compliance with existing consumer
protections.
6.7.1 Digital tool use
Cardholders are using digital credit card account servicing tools more, with greater adoption of
mobile apps and e-statements since our last report, while online portal enrollment declined
slightly. For the first time, enrollment in mobile applications surpassed that of online accounts,
suggesting a preference among some cardholders for mobile-first banking technology.
262
The
share of consumers electing to receive statements electronically rather than by mail is
continuing to increase rapidly; in 2022, more than two out of three consumers received only e-
statements for their general purpose credit cards.
263
Online account enrollment declined slightly
in 2021 and 2022, relative to 2020, possibly as banks began reopening after the relaxing of
pandemic-era safety policies. One survey found online enrollment correlated negatively with
age, with younger cardholders more likely to establish online access.
264
Cardholders who decide
not to set up online account access tend to prefer physical statements from the mail, voice
concerns regarding the safety of online accounts, and state a preference for banking
simplicity.
265
Comment Letter, Ruth Sheets Comment Letter, Shannon Kelley Comment Letter, and Cathy Lewis-Dougherty
Comment Letter.
262
Industry trade groups note that “Consumers are increasingly choosing to receive account disclosures, statements,
and other documents electronically for a variety of reasons, including convenience, accessibility, speed, security,
health and safety, and environmental concerns...” See ABA, CBA, NAFCU Comment Letter, at 13-15.
263
One commenter claims e-statement adoption could be driven by credit card issuers’ use of “deceptive practices to
push consumers to opt-in to electronic statements” and recommends the CFPB require issuers to inform
“cardholders of their right to receive paper statements.” See National Consumer Law Center Comment Letter, at 12-
13.
264
One survey by Auriemma Consulting Group found higher rates of reported online access for credit cards currently
held, but also found younger cardholders were more likely to say they had set up online access for their cards. See
Auriemma Consulting Group, Personalizing Online Tools and Card Controls, Financial Wellness, Buy Now, Pay
Later, and AI Chatbots, The Payments Report, at 19-20 (May 2023).
265
Id. Another commenter notes that those who do not receive physical statements may be missing certain
disclosures, such as “information about the costs of carrying a balance.” See Anonymous Comment Letter (CFPB-
2023-0009-0090).
131 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 21: SHARE OF ACTIVE ACCOUNTS ENROLLED IN ONLINE PORTAL, MOBILE APPS, AND RECEIVING
ONLY E-STATEMENTS, GENERAL PURPOSE (MMI)
Adoption of card issuer mobile apps continued to grow for users of all age groups, with greater
levels of adoption by younger consumers. Users under age 25 continued to use mobile apps at a
high rate, surpassing 95 percent in 2022. Enrollment in mobile applications continued a six-
year trend of increasing adoption for both users aged 25 to 64 and over 65, reaching 83 percent
and 49 percent respectively. While the pandemic may have contributed to accelerating the
adoption of mobile apps in 2020 and 2021, enrollment has been increasing steadily for all age
groups over many years, as shown in Figure 22. Overall, three out of four active accounts were
enrolled in mobile apps in 2022.
FIGURE 22: SHARE OF ACTIVE ACCOUNTS ENROLLED IN MOBILE APPS BY AGE, GENERAL PURPOSE
(MMI)
Cardholder payments demonstrate a continued gradual shift toward automatic and online
methods. As shown in Figure 23, 61 percent of active accounts made a non-automatic payment
70%
71%
73%
75%
78%
80%
76%
30%
34%
51%
55%
59%
63%
73%
76%
36%
40%
45%
50%
55%
57%
64%
67%
2015 2016 2017 2018 2019 2020 2021 2022
0%
20%
40%
60%
80%
Online
Mobile E-statement
51%
55%
59%
63%
73%
76%
2017 2018 2019 2020 2021 2022
0%
20%
40%
60%
80%
100%
Under 25 25 to 65 65+ Overall
132 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
online or via mobile app in the last billing cycle of 2022, and another 20 percent made a
payment via autopay, both new highs in our data. Despite the trend toward digital payments,
there remain a share of accounts that continue to mail in paper checks to pay their credit cards,
at seven percent in 2022.
FIGURE 23: SHARE OF ACTIVE ACCOUNTS THAT MADE A PAYMENT IN THE LAST CYCLE OF THE YEAR BY
PAYMENT METHOD, GENERAL PURPOSE (MMI)
266
The share of consumers enrolled in automatic payments continues to increase for all age groups.
While automatic payment usage was highest among cardholders under 25 at 27 percent in 2022,
all age groups saw automatic payment enrollment rise four to seven percentage points since
2019. Cardholders can typically choose between making automatic payments for the minimum
payment due, the total statement balance, or a fixed other amount. Establishing automatic
payments may be done online, or may be facilitated by mobile apps, of which adoption is
growing rapidly. Increased use of automatic payments is generally a positive sign for consumers,
since automatic payments set up in advance can ensure cardholders who forget to make a
payment by the due date can still avoid late fee charges, assuming the automatic payment goes
through in an amount greater than or equal to the minimum payment amount.
267
Automatic
payments may also be a way to avoid paying interest on balances and new purchases if set at a
level at least equal to the cardholder’s statement balance. However, if an account is revolving
266
Values do not sum to 100 percent as certain forms of payment, such as telephone and payments from a third-
party, are not included.
267
If a cardholder sets automatic payments at a fixed dollar amount each month that would not satisfy at least the
minimum payment, issuer practices vary in whether they will increase the automatic payment to at least the
minimum payment or move forward with the set amount and assess a late fee unless the customer makes additional
payments. See CFPB, Supervisory Highlights, Issue 28, Fall 2022, (Nov. 16, 2022), at 16,
https://www.consumerfinance.gov/data-research/research-reports/supervisory-highlights-issue-28-fall-2022/.
16%
55%
9%
18%
60%
7%
18%
60%
9%
20%
61%
7%
Automatic Non-automatic online Paper
0%
10%
20%
30%
40%
50%
60%
2019 2020 2021 2022
133 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
and paying some amount less than the total balance due, autopay may cause them to incur
interest on the difference.
268
An automatic payment later in the billing cycle is also more costly
for cardholders who are no longer in their grace period or revolving a balance: interest accrues
since the time of purchase for the former and on average daily balances for the latter. Earlier or
more frequent payments would reduce finance charges compared to an automatic payment later
in the cycle for some cardholders.
269
FIGURE 24: SHARE OF ACTIVE ACCOUNTS ENROLLED IN AUTOMATIC PAYMENTS BY AGE, GENERAL
PURPOSE (MMI)
Non-automatic electronic payments remain the most common payment method across all age
groups, but a significant share of older Americans continue to use paper checks for card
repayment. Younger cardholders continue to make electronic payments at higher rates than
older cardholders, but electronic payment usage by all cardholder groups was virtually
unchanged from 2020. Older Americans are the primary users of paper checks for credit card
repayment. Less than one percent of payment-making cardholders under age 25 and less than
four percent of those 25 to 64 made a payment by paper in the last cycle of 2022. In contrast,
nearly 22 percent of cardholders over age 65 made at least one paper payment in the last cycle of
2022. Paper methods of payment may be the only option available to some cardholders, such as
those without internet access. Some cardholders rely on paper payments for budgeting (i.e.,
balancing a checkbook) and reviewing transactions to spot fraud or overcharging. However,
268
Additionally, if the consumer’s bank account lacks sufficient funds to cover the payment, the consumer generally
will incur an NSF fee or overdraft fee from their bank.
269
At least one major issuer provides instructions online providing cardholders with the option to split automatic
payments into two equal amounts in a given cycle, but automatic payments are generally assessed monthly. See Citi,
Set up AutoPay, https://www.citi.com/CRD/PDF/CITI_AUTOPAY_ENROLL.pdf (last accessed July 7, 2023).
14%
16%
18%
20%
22%
24%
2017 2018 2019
2020
2021
2022
0%
5%
10%
15%
20%
25%
30%
Under 25 25 to 65 65+
Overall
134 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
paper payment methods come with additional risks, such as mail delays that can result in late
payment fees and interest rate increases, as noted by many commenters.
270
FIGURE 25: SHARE OF ACTIVE PAYMENT-MAKING ACCOUNTS THAT MADE AT LEAST ONE PAYMENT IN
THE LAST CYCLE OF THE YEAR BY AGE AND PAYMENT METHOD, GENERAL PURPOSE, 2022
(MMI)
6.7.2 Developments
INFORMATION SHARING
One in four active accounts had affirmatively opted out of any form of consumer information
sharing at the end of 2022, with older cardholders more likely to have opted out than younger
cardholders. One in three cardholders over age 65 had opted out of information sharing,
compared to one in four ages 25 to 64 and one in seven under age 25. Information collection and
sharing policies vary, but generally involve anonymized data regarding individual purchases that
can be used by the company or sold to another company for marketing purposes. In some cases,
the data collected may result in more targeted advertising, providing cardholders with offers
that may be more likely to interest them. In other cases, the data collected could result in some
consumers receiving offers with more expensive personalized pricing for the same product
compared to other consumers. While consumers can opt out of some forms of data sharing, they
cannot opt out of all forms, such as data sharing with affiliates.
271
As analytical tools have
become more sophisticated, transaction data have become more valuable, and the risks of fair
270
See, e.g., Betty Brendel Comment Letter, at 1; John Duggan Comment Letter, at 1; Robert Posch Comment Letter,
at 1.
271
See, e.g., Chase, U.S. Consumer Privacy Notice, https://www.chase.com/digital/resources/privacy-
security/privacy/consumer-privacy-notice.html. See also Bank of America, U.S. Consumer Privacy Notice,
https://www.bankofamerica.com/security-center/consumer-privacy-notice/.
82%
1%
66%
4%
38%
22%
61%
7%
Non-automatic online Paper
0%
20%
40%
60%
80%
Under 25 25 to 64 65+ Overall
135 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
lending law violations, customer re-identification, or use by nefarious actors have also
increased.
272
Business practices involving the collection and sale of consumer data, such as the
use of digital dark patterns to obtain consent, are an area of continued concern for the CFPB.
273
FIGURE 26: SHARE OF ACTIVE ACCOUNTS OPTED OUT OF INFORMATION SHARING BY AGE, GENERAL
PURPOSE, 2022 (MMI)
ARTIFICIAL INTELLIGENCE
The development and implementation of technology marketed as AI has the potential to
improve the customer experience, but also carries some risks for cardholders. AI can be used to
automate functions, assist in completing tasks and making decisions, and can result in cost
savings and operational efficiencies. In the credit card context, AI is already integrated into
interactive customer service chatbots, reward program personalization, credit underwriting,
marketing, and fraud detection. Credit card companies are using automated decision-making
models in credit underwriting in efforts to reduce default rates.
274
Automated decision-making
tools have also been used for fraud detection for several years by banks, card networks, and
272
These risks have drawn increased attention from Congress in recent years. See, e.g., Sherrod Brown, Letter from
Senator Sherrod Brown to Secretary Janet Yellen, (June 7, 2022),
https://www.banking.senate.gov/imo/media/doc/brown_letter_fsoc_0607221.pdf.
273
See 88 FR 16951, (Mar. 31, 2023), https://www.federalregister.gov/documents/2023/03/21/2023-05670/request-
for-information-regarding-data-brokers-and-other-busi ne ss-practices-involving-the-collection. See also FTC,
Bringing Dark Patterns to Light, (Sept. 2022),
https://www.ftc.gov/system/files/ftc_gov/pdf/P214800%20Dark%20Patterns%20Report%209.14.2022%20-%20F
INAL.pdf, at 15.
274
See, e.g., Discover Financial, Discover Partners with ZestFinance to Implement AI-Based Underwriting Platform,
(May 4, 2019), https://investorrelations.discover.com/newsroom/press-releases/press-release-
details/2019/Discover-Partners-with-Ze stFinance -to-Implement-AI-Based-Underwriting-Platform/default.aspx.
13.7%
23.1%
33.2%
24.8%
Under 25 25 to 64 65+ Overall
0%
5%
10%
15%
20%
25%
30%
35%
136 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
third-party technology companies.
275
More recently, companies are exploring the use of AI to
analyze customer data to better predict customer patterns and behaviors, leading to changes in
customer service functions.
276
One company promises card companies improved credit card
loyalty with a “generative” AI solution.
277
The CFPB, along with other financial regulatory
agencies, is monitoring the financial industry’s use of technology marketed as AI and is
committed to enforcing existing consumer protection laws regardless of whether legal violations
occur through traditional means or advanced technologies.
278
In recent years, card companies have introduced AI-powered chatbots to navigate and execute
digital account management functions and make transactions.
279
As noted in our previous
report, user engagement with chatbots has risen significantly since the beginning of the
pandemic, and recent estimates suggest that 37 percent of the U.S. population interacted with a
bank’s chatbot in 2022.
280
Chatbots can provide many of the same account servicing features
that humans customer service representatives can do, without the wait. While chatbots can be
useful for resolving some basic inquiries, their effectiveness wanes as problems become more
complex. Recent CFPB research identified a variety of negative consumer outcomes due to the
technical limitations of chatbot functionality, including wasted time, inability to reach a human,
and inaccurate information.
281
As with any technology, chatbots must comply with all applicable
275
See, e.g., Sara Castellanos and Kim S. Nash, Wall St. J., Bank of America Confronts AI’s ‘Black Box’ With Fraud
Detection Effort, (May 11, 2018), https://www.wsj.com/articles/bank-of-america-confronts-ais-black -box-wi th -
fraud-detection-effort-1526062763; Tim Maxwell, Bankrate, How major credit card networks protect customers
against fraud, (Apr. 24, 2023), https://www.bankrate.com/finance/credit-cards/major-credit-card-networks-
protect-against-fraud/.
276
See, e.g., Carl Franzen, VentureBeat, AmEx is experimenting cautiously with generative AI for fintech, (May 29,
2023), https://venturebeat.com/ai/amex-is-experimenting-cautiously-with-generative-ai-for-fintech/.
277
See Alex Olesen, Persado, Generative AI to Improve Credit Card Loyalty, (Jan. 20, 2023),
https://www.persado.com/articles/generative-ai-to-improve-credit-card-loyalty/.
278
See CFPB., Joint Statement on Enforcement Efforts Against Discrimination and Bias in Automated Systems,
(Apr. 2023), https://files.consumerfinance.gov/f/documents/cfpb_joint-statement-enforcement-against-
discrimination-bias-automated-systems_2023-04.pdf.
279
See, e.g., Capital One, Eno is ready to take banking conversations to the next level, (Oct. 24, 2017),
https://www.capitalone.com/learn-grow/money-management/eno-chatbot-banking-conversations-next-level/;
Capital One, Meet Eno, (last accessed July 19, 2023), https://www.capitalone.com/digital/eno/.
280
2021 Report, supra note 3, at 171; Jenna McNamee, Bank of America adds a human touch to its virtual assistant,
Erica, Insider Intel. (Dec. 14, 2022), https://www.insiderintelligence.com/content/bank-of-america-adds-human-
touch-erica.
281
CFPB, Chatbots in consumer finance, (June 2023), https://www.consumerfinance.gov/data-research/research-
reports/chatbots-in-consumer-finance/chatbots-in-consumer-finance/.
137 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
federal consumer financial laws, and entities may be liable for violating those laws when they
fail to do so.
Consumers appear more comfortable with certain applications of AI than others, and that
comfort level varies widely with age. One study that surveyed banking customers found that 52
percent of people were comfortable with AI providing customer service at their primary bank,
but comfort levels ranged from 68 percent for Gen Z and Millennials to 35 percent for Baby
Boomers.
282
People in all generations were more comfortable with AI being used to detect fraud,
at 62 percent, but less comfortable with AI being used to assess creditworthiness, at 47
percent.
283
Companies must ensure any use or development of these technologies continues to comply with
existing consumer protection laws. AI modeling typically requires the collection of large
amounts of consumer data, which increases the risk of consumer harm from the misuse or
mishandling of those data. Nefarious actors may use personal data elements to develop more
effective spear phishing attacks, which can be easily automated using available AI language tools
like ChatGPT, or may convincingly mimic customer service communications using voice cloning,
leading to compromised account security.
284
Even well-intentioned developments may risk
consumer harm, such as the reliance on datasets that incorporate historical bias, which could
lead to discriminatory outcomes in ways that may violate federal laws.
PRE-CHARGE-OFF COMMUNI CATIONS
Issuers reported having policies in place that specify the frequency with which their collectors
can call, leave voicemails, email, text, and otherwise contact a consumer regarding a delinquent
account. Table 2 below provides the ranges of issuers’ policy limits on consumer contact via
various media and actual average attempts for each of those media. Issuers reported that their
call intensity strategies depended on an account’s stage of delinquency, risk level, balance size,
tenure, and past delinquency frequency, among other factors.
282
See Auriemma Group, Personalizing Online Tools and Card Controls, Financial Wellness, Buy Now, Pay Later, and
AI Chatbots, The Payments Report, at 80-81 (May 2023).
283
Id.
284
See Cheryl Winokur Munk, Wall St. J., How Hackers Can Up Their Game by Using ChatGPT, (June 5, 2023),
https://www.wsj.com/articles/hackers-up-their-game-using-chatgpt-fe870ec4. See also Andrew Patel and Jason
Sattler, WithSecure, Creatively malicious prompt engineering, (Jan. 2023),
https://labs.withsecure.com/content/dam/labs/docs/WithSecure-Creatively-malicious-prompt-engi neering.pdf.
138 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
TABLE 2: RANGES OF CONSUMER CONTACT POLICY LIMITS AND ACTUAL AVERAGE ATTEMPTS IN 2022
(MMI)
Policy limit or actual
attempts
Phone call attempts
per day
Voicemails per day
Postal letters per
month
Policy limit 1 to 11 1 1 to 3
Actual average
attempts
285
1.0 to 2.8 0.0 to 0.8 0.3 to 1.5
Issuers reported far fewer contact attempts on average per account than allowed by their own
policies. All surveyed issuers reported that their policies included daily caps per account on
phone calls. Daily contact attempt policy limits ranged from one call to 11 calls per account,
indicating that some issuers imposed stricter limits on phone calls compared to the range of 3 to
11 as reported in the CFPB’s 2021 Report.
286
The majority of MMI respondents reported setting
a weekly cap of 7 call attempts in 7 days per account or a cap of one call attempt per day.
Issuers reduced slightly both the number of voicemails per account per day and the number of
call attempts in 2022. No issuers surveyed for this report allowed more than one voicemail per
account per day, compared to a small minority of issuers who reported allowing two voicemails
per account per day in the 2021 Report.
287
The actual average number of voicemails per account
per day ranged from 0.0 to 0.8, which is a decrease from the 0.0 to 0.9 range reported in the
2021 Report. Along with slightly more restrictive maximums for phone calls, actual average
attempts also decreased. In 2022, issuers averaged between 1.0 and 2.8 contact attempts via
telephone per day, down from 1.3 to 3.0 reported for 2020. No issuer allowed calls to continue
within a given day once a “right party contact” had been made.
288
Issuers continue to increase their use of email to collect delinquent debt. All the issuers surveyed
reported using email as part of their credit card collection strategy, as was the case in 2020 and
2019. However, the reported percentage of email-eligible accounts (defined as accounts for
which the consumer provided a valid email address and agreed to be contacted at that address)
ranged from 76 to 97 percent, which is up from 2020, in which issuers reported 71.5 to 92.6
285
Average attempts via the telephone and voicemail channels were defined as the number of calls made or voicemails
left to all accounts that were called divided by the number of unique delinquent accounts that were called in each
period of time. For postal letters sent, average attempts by letter were defined as the number of letters sent to
delinquent accounts divided by the number of unique delinquent accounts. The time frames were daily, weekly, or
monthly, depending on common practices in that channel.
286
2021 Report, supra note 3, Table 1, at 132.
287
Id.
288
Right party contact occurs when the issuer or collector can reach and speak with the consumer whom the issuer
believes is responsible for the debt via telephone.
139 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
percent of their accounts being email-eligible. The monthly average percent of email-eligible
accounts increased from 68.3 percent in 2018 to 84.1 percent in 2020 to 87.6 percent in 2022.
In 2022, roughly two-thirds of accounts with eligible email identification received at least one
email related to debt collection.
289
Survey respondents reported that on average, only 36.3
percent of accounts that received email opened their emails. This click-open rate remains low
but is an increase from the 31.9 percent click-open rate reported in 2020. This low click-open
rate could be attributed to consumer concerns about email spam or scams. An average of less
than one percent of emails bounced back, potentially indicating that issuers generally have
working emails on their files – this trend has remained consistent from 2020 to the present
survey. Many issuers reported using email proactively for account servicing (e.g., sending
reminders about a pending withdrawal from a consumer’s bank account for a recurring
payment) as part of their pre-charge-off communication strategy. Fewer issuers stated that they
used email only reactively, such as when a consumer initiated a conversation online or requested
that documents be sent by email. Issuers who reported using email typically restricted the
number of emails that could be sent to two or three emails per week.
289
2021 Report, supra note 3, Table 2, at 134.
140 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
TABLE 3: MONTHLY AVERAGE EMAIL, TEXT, AND WEB CHAT ELIGIBILITY AND ENGAGEMENT RATES,
2022 (MMI)
Email Text Web chat
Percent of accounts
eligible for the
channel
290
87.6% 58.9% 0.9%
Percent of eligible
accounts engaged
291
62.6% 57.7% Not applicable
Click-open rate
292
36.3% Not applicable Not applicable
Email Bounce-back
rate
293
1.0% Not applicable Not applicable
Text opt-out rate
294
Not applicable 1.3% Not applicable
The share of issuers using text messages as part of their credit card collection strategy has
continued to increase since the CFPB began tracking this figure in its 2017 Report. However, the
percent of accounts eligible for text showed a slight decrease from 2020 to 2022, where the
account eligibility rate dropped from 60.3 percent to 58.9 percent. Despite this slight drop, the
text engagement rates reported showed a significant increase, with the engagement rate rising
from 36.6 percent in 2020 to 57.7 percent in 2022. Additionally, the text opt-out rate is notably
low, at 1.3 percent.
295
These trends indicate a shift in consumer behavior in the past few years,
with more consumers engaging in collection communications via text, similar to trends observed
in mobile app usage discussed in Section 6.7.1.
The majority of issuers surveyed offer to engage with delinquent consumers via “web chat,”
where a consumer can click a chat button on the issuer’s webpage to communicate about their
debt with a collections agent. However, the percent of eligible accounts engaged via web chat
290
Defined as the total number of unique delinquent accounts with a consented email address or text-consented
cellphone number in a month divided by the total number of unique delinquent accounts in that same month.
291
Defined as the number of unique delinquent accounts that were emailed in a month divided by the total number of
unique delinquent accounts with a consented email address in that same month.
292
Defined as the number of emails sent to delinquent accounts that were clicked open in a month divided by the total
number of emails sent to delinquent accounts in that same month.
293
Defined as the number of emails sent to delinquent accounts returned undeliverable in a month divided by total
number of emails sent to delinquent accounts in that same month.
294
Defined as the number of consumers who received texts who subsequently opted-out of future communication
using the same channel in a month divided by the total number of consumers who received texts that month.
295
The text opt-out rate was not tracked in the 2021 Report, supra note 3.
141 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
continues to decline. In the 2019 Report, web chat account eligibility rates were at 2.5 percent.
In the 2021 Report, this number dropped to 1.4 percent, and the current web chat account
eligibility rates now average at 0.9 percent. This is a sharp contrast to industry-wide trends to
greater adoption of digital channels, particularly as engagement rates with text have noticeably
risen. It is possible that in-app communication is replacing web chat communication for many
consumers with delinquent debts; a growing number of issuers report using mobile apps to
communicate with consumers about delinquent balances, with almost half of respondents
offering this platform. No respondents reported utilizing social media communication as a
collection tool.
6.8 Debt collection
First, this section reviews issuer policies and practices with respect to resolving delinquent debt
prior to charge-off, including communication practices, use of first-party and third-party
collectors, and loss mitigation programs. Second, this section reports on the recovery of debt
following charge-off, including measures of recovery of charged-off debt through various
channels, such as third-party agency collections, debt sale, and litigation.
6.8.1 Collections prior to charge-off
This section reviews surveyed credit card issuers’ policies, procedures, and practices with
respect to resolving delinquent debt prior to accounts reaching 180 days of delinquency, at
which time credit card accounts are generally charged off in accordance with OCC guidance.
This includes communication policies and practices such as telephone call limits, use of digital
channels (email, text, self-serve portals) use of first- and third-party collectors, and loss
mitigation programs offered prior to charge-off.
All respondents reported leveraging some pre-charge-off collection activities in-house. An
issuer’s in-house collection efforts may include such methods as calling, texts, emails, letters,
mobile app messaging, and web chat. Most of the issuers also supplemented the activities of
their in-house agents with first-party collectors: outside collectors who work under the name
and the direction of the creditor when collecting on delinquent debt. An issuer may also turn to
a third-party agency to collect in the agency’s own name and not in the name of the original
creditor. Most of the surveyed issuers worked with third-party collectors prior to charge-off.
FIRST-PARTY COLLECTIONS
To collect pre-charge-off accounts, only half of the issuers reported using first-party collectors to
support in-house collection activities. Almost all issuers typically reported allocating work
randomly between in-house and first-party collectors based on collector availability, where first
142 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
party agents use issuers’ own case management system and dialer technology. Issuers reported
that they generally do not track pre-charge-off account placements and their performance
separately between in-house and first-party collections. However, a minority of respondents
allocated only higher-risk accounts to first-party collectors as opposed to in-house collectors,
which is consistent with findings reported in past reports as well.
THIRD-PARTY CONTINGENCY COLL ECTI ONS
More than half of surveyed issuers reported using third-party debt collection agencies on a
contingency fee basis for pre-charge-off collections. Only a small share (2.6 percent in 2022) of
pre-charge-off collections inventory was placed with these agencies. Generally, high-risk and
specialty accounts are segmented and placed with these third-party agencies. For instance, some
respondents placed specialized account types with third-party collectors, such as accounts that
are represented by for-profit debt settlement companies, accounts of deceased consumers, and
accounts for which bankruptcy is pending. Most issuers also provided additional incentives to
third-party collectors based on their performance relative to a set financial target or to the
performance of other collection agencies.
PERFORMANCE
FIGURE 27: AVERAGE QUARTERLY PERFORMANCE FOR PRE-CHARGE-OFF COLLECTIONS, 2021 AND
2022, WEIGHTED BY ISSUER’S TOTAL RECEIVABLES (MMI)
Pre-charge-off collections performance improved slightly over the two-year survey period. Cure
rates increased 2.3 percentage points, going from 52.4 percent in 2021 to 54.7 percent in
52.4%
6.3%
23.4%
54.7%
5.2%
22.9%
Cure rate Charge-off rate Liquidation rate
0%
10%
20%
30%
40%
50%
2021 2022
143 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
2022.
296
Liquidation rates remained constant at 23 percent.
297
Charge-off rates declined slightly,
going from an average of 6.3 percent in 2021 to 5.2 percent in 2022.
298
6.8.2 Loss mitigation and re-aging practices
Credit card issuers used re-aging and various loss mitigation practices, including short- and
long-term forbearance programs, debt management plans offered by consumer credit
counseling agencies, and debt settlement. Issuers reported that they structured their loss
mitigation practices conforming to guidance issued by the Federal Financial Institutions
Examination Council (“FFIEC”) and the federal banking agencies on the use of these collections
tools.
299
RE-AGI NG
Re-aging returns a delinquent, open-end credit card account to current status without collecting
the total amount of principal, interest, and fees that are contractually due. Issuers’ policies allow
re-aging of open-end accounts when a borrower makes at least three consecutive minimum
monthly payments or an equivalent amount in a lump-sum payment. The number of re-ages on
an account is limited to one in 12 months and two in five years. An account that is enrolled in a
long-term internal forbearance or debt management program may be eligible for a third work-
out re-age within the five-year period. All surveyed issuers’ re-aging policies aligned with the
guidance offered by the FFIEC and federal banking agencies.
300
296
The cure rate is defined by the sum of unique balances that were delinquent (past due, pre-charge-off) at any point
during the given quarter and rolled back to current (returned to 0 days past due) as of the end of the given quarter
divided by the sum of unique balances that were delinquent at any point during the given quarter. Balances are
counted only once per quarter, at the time when the account or balance became delinquent in the given quarter.
297
The liquidation rate is defined by the cumulative payments by accounts that were delinquent at the start of the
quarter divided by the balances of those accounts at the start of the quarter.
298
The charge-off rate is defined by the sum of unique balances that were delinquent (past due, pre-charge-off) at any
point during the given quarter and were charged off at the end of the given quarter divided by the sum of unique
accounts or balances that were delinquent at any point during the given quarter. Balances are counted only once per
quarter, at the time when the balance first became delinquent in the given quarter.
299
See e.g., FFIEC, Uniform Retail Credit Classification and Account Management Policy: Policy Implementation,
65 FR 36903 (June 12, 2000); Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve
System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Credit Card Lending: Account
Management and Loss Allowance Guidance, OCC Bulletin 2003-1, (Jan. 8, 2003), https://occ.gov/news-
issuances/bulletins/2003/bulletin-2003-1.html.
300
Id.
144 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FORBEARANCE PROGRAMS
Forbearance programs are designed to assist borrowers experiencing financial hardship. These
programs can be “short-term,” aimed at assisting borrowers experiencing hardships expected to
last 12 or fewer months, or “long-term,” intended to aid borrowers experiencing continued
hardships lasting longer than 12 months. Issuers reported that their long-term programs
generally require borrowers to repay their credit card debt within 60 months. To meet this
amortization timeframe, creditors reduce interest rates, eliminate fees, and lower the monthly
required payment amount. All issuers surveyed generally reported assessing borrowers’
willingness and ability to pay in determining financial difficulty. All surveyed issuers’
forbearance policies aligned with the guidance offered by the FFIEC and federal banking
agencies.
301
Almost half of the survey respondents did not offer short-term forbearance programs over the
last several years. All issuers reported that they do not assign hardship program-eligible
accounts to third-party collections agencies or allow their third-party collection agencies to offer
and enroll borrowers in hardship programs, due to the complexity of managing these programs.
CREDIT COUNSELING AGENCIES
Issuers work with consumer credit counseling agencies (“CCAs”) to help borrowers resolve their
financial hardships, as an additional component of their loss mitigation efforts. CCAs work with
borrowers to develop a budget and a debt management plan (“DMP”) for all the consumer’s
enrolled debts, which may be owed to multiple creditors. These plans generally involve paying
creditors a fixed payment amount at a reduced interest rate.
Most respondents reported funding CCAs through a “fair share” payment, which is a payment
based on a percentage of the amount the consumer has paid back to the issuer. Fair share
payments ranged between two percent to seven percent among the issuers. However, a few of
the respondents also fund their CCAs through grant funding to support their consumer financial
literacy programs. While all work with non-profit CCAs, some reported working with for-profit
agencies as well, though they did not provide any fair share payments to these for-profit CCAs.
Several issuers reported working with CCAs to pilot DMPs with extended amortization that
extend beyond the traditional 60-month amortization. Several issuers also reported working
with non-profit credit counselling agencies on a pilot program that offers a less-than-full-
balance settlement program for post-charge-off accounts that do not qualify for a traditional
DMP. For example, consumers enrolled in such programs may be able to settle their entire card
balance for half of the amount owed with payments in installments lasting up to 36 months. This
301
Id.
145 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
alternative settlement program is designed to provide a lower cost option for consumers who
otherwise might consider a for-profit debt settlement company.
FIGURE 28: QUARTERLY LOSS MITIGATION TOTAL INVENTORY VERSUS NEW ENROLLMENTS AS A SHARE
OF DELINQUENT BALANCES (MMI)
302
All issuers reported offering one or more types of forbearance or debt management programs
with varying interest rates, monthly fixed payment amounts, and amortization periods. Short-
term program enrollment spiked during 2020 due to the pandemic. Since then, as seen in Figure
28, the total new enrollment rate, measured as a percent of pre-charge-off delinquent dollars
newly enrolled in various forbearance programs and DMPs, has come down and remained well
below two percent during 2021 and early 2022. However, given the increase in delinquency, the
enrollment rate increased during the last two quarters of 2022. While the total inventory on all
loss mitigation programs peaked in Q2 2021, due to pandemic-related enrollments, inventory
has been declining steadily during the rest of 2021 and 2022.
As Figure 29 shows, the increase in new enrollment during the latter half of 2022 came from
increases in all program enrollments, though internal long-term programs showed more growth
than short-term programs or DMPs. The average quarterly new enrollment rate among
individual issuers ranged widely from a low of 0.3 percent to a high of 5.5 percent during 2022,
potentially due to differing portfolio characteristics and loss mitigation strategies among the
issuers.
302
“Inventory” refers to total balances for all accounts that are in active status in a forbearance program as of the end
of the quarter.
19.0%
20.2%
18.3%
16.0%
14.5%
14.0%
12.4%
11.2%
2.6%
1.9%
1.8%
1.7%
1.7%
1.6%
2.0%
2.1%
2021 2022
0%
5%
10%
15%
20%
Total inventory Total new enrollments
146 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 29: QUARTERLY LOSS MITIGATION PROGRAM NEW ENROLLMENTS AS A SHARE OF DELINQUENT
BALANCES (MMI)
DEBT SETTLEMENT
All issuers have policies in place to offer settlements proactively or reactively to consumers who
meet the established risk criteria set by the creditor. These offers are extended via in-house
operations or through third parties. Pre-charge-off balances are settled with a single lump-sum
payment or multiple installments. Installment settlements typically consist of three payments,
but pursuant to guidance from the Office of the Comptroller of the Currency for national banks
and federal savings associations the total duration of the payments should not exceed three
months.
303
However, post-charge-off settlements can be structured over any length of time and
generally any reasonable amount of payment is accepted by the creditors and their debt collector
for each installment.
As reported in the 2021 Report, the share of delinquent balances enrolled in settlement
(“settlement enrollment rate”) increased from 2019 to 2020 by 21 percent and nine percent for
pre- and post-charge-off, respectively, due to the gains in consumer liquidity from various
economic stimulus payments and related debt pay-down by consumers during the pandemic.
304
However, as the Figures 30 and 31 show, the settlement enrollment rate has declined
significantly between Q1 2021 and Q4 2022 by 40 percent and 35 percent for pre-charge-off and
post-charge-off respectively. The settlement enrollment rate was higher for post-charge-off
balances (1.3 percent in 2022) than pre-charge-off balances (0.8 percent in 2022). Among
303
See Office of the Comptroller of the Currency, Comptroller’s Handbook: Credit Card Lending, Version 1.2 (Jan.
2017), https://www.occ.treas.gov/publications/publications-by-type/comptrollers-handbook/credit-card-
lending/pub-ch-credit-card.pdf.
304
2021 Report, supra note 3, at 142.
1.1%
0.7%
0.7%
0.7%
0.7%
0.6%
0.8%
0.8%
1.1%
0.8%
0.8%
0.8%
0.8%
0.7%
0.9%
1.0%
0.4%
0.3%
0.3%
0.2%
0.2%
0.3%
0.3%
0.3%
2021 2022
0%
0.3%
0.6%
0.9%
1.2%
Short term new enrollment Long term new enrollment DMP new enrollment
147 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
surveyed issuers, the quarterly pre-charge-off settlement enrollment rate ranged from 0.1
percent to 12.4 percent, and quarterly post-charge-off settlement enrollment rate ranged from
0.3 percent to 10.6 percent.
FIGURE 30: QUARTERLY SHARE OF PRE-CHARGE-OFF BALANCES ENROLLED IN SETTLEMENT (MMI)
FIGURE 31: SHARE OF POST-CHARGE-OFF BALANCES ENROLLED IN SETTLEMENT (MMI)
Settlement rate generally varied by the age of the debt, with a higher rate for earlier charge-off
placements like prime or secondary placements, and lower rate for later placements like tertiary
or quad placements. Average settlement rate remained steady between 2021 and 2022 at about
55 percent for pre-charge-off and 51 percent for post-charge-off in 2022, though there was some
variation in the rates among individual respondents.
0.6%
0.5%
0.4%
0.4%
0.3%
0.3%
0.3%
0.3%
0.8%
0.7%
0.6%
0.5%
0.6%
0.5%
0.4%
0.5%
0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4
For-profit settlement companies Directly with consumers
0.8%
0.8%
0.7%
0.7%
0.8%
0.7%
0.6%
0.6%
1.2%
1.3%
1.1%
0.9%
1.0%
0.9%
0.8%
0.7%
0%
0.4%
0.8%
1.2%
1.6%
2.0%
2021Q1
2021Q2 2021Q3
2021Q4
2022Q1 2022Q2
2022Q3 2022Q4
For-profit settlement companies Directly with consumers
148 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
DEBT SETTLEMENT COMPANIES
Borrowers sometimes work with debt settlement companies (“DSCs”), which are typically for-
profit entities with the primary objective of enrolling qualified borrowers in a debt settlement
program.
305
These firms do not receive any compensation from issuers. Instead, they typically
assess the borrower a fee for the services.
All the surveyed issuers have established policies and procedures on how to manage accounts
enrolled with DSCs. Most issuers maintain a policy of not working directly with DSCs. Those
who work with DSCs require that these companies obtain consumer consent (verbal or written)
to work with issuers on the consumer’s behalf. Some issuers place accounts that involve DSCs
with specialty third-party agencies to review for potential litigation. Most issuers that work with
DSCs reported that they offer DSCs the same settlement rates available to consumers who call
the creditor directly to request settlements, but there is no charge to consumers who settle
directly with the issuer. If a consumer settles through a DSC, they typically incur additional costs
of 20 to 25 percent of the balance owed. After significant growth in DSC-facilitated settlements
in prior years, DSC settlement volume and total settlement volume declined in 2021 and 2022,
presumably due to the availability of pandemic-related stimulus payments, eviction
moratorium, and mortgage forbearance. The share of balances enrolled in settlement by DSCs
was 58 percent and 42 percent, respectively, for pre-and post-charge-off balances in 2022.
6.8.3 Recovery following charge-off
Once an account charges off, it is placed into one of a variety of recovery channels to facilitate
further collections of the balance owed, such as internal recovery, third-party agency placement,
pre-litigation and litigation, and debt sale. Issuers may also warehouse certain accounts where
balances are considered unlikely to be repaid.
306
As shown in Figure 32, newly charged-off debt
(“fresh charge-offs”) generally increased from 2015 to 2019 but dipped during the COVID-19
pandemic. In 2022, issuers in the sample charged off $36.5 billion in debt, which represented a
15 percent increase from 2021 but remained below the pre-pandemic peak of $42 billion in
2019.
305
See Greg J. Regan, Options for Consumers in Crisis: An Updated Economic Analysis of The Debt Settlement
Industry (Data as of Mar. 31, 2020), American Fair Credit Council (Feb. 16, 2021),
https://americanfaircreditcouncil.org/wp-content/uploads/2020.12.31-AFCC-Report-v.1.19.21-1.pdf.
306
Warehoused balances are generally those that issuers do not actively seek to collect and generally include accounts
issuers considered to be uncollectible or unlikely to be repaid, including older accounts that may be past the statute
of limitations. Some issuers also reported that they may place accounts in warehouse status when transitioning these
accounts between placements.
149 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 32: ANNUAL FRESH CHARGE-OFF BALANCES (MMI)
In general, the current survey found that:
• All issuers warehoused a significant portion of their overall post-charge-off inventory;
• All issuers used third-party agencies throughout the entire review period to collect at
least a portion of their charged-off debt;
• Most issuers engaged in internal recovery, though for a relatively small portion of their
charged-off debt;
• Most issuers engaged in post-charge-off litigation to collect debt from consumers;
• Most issuers reported holding a sizeable amount of debt past the statutes of limitation in
their inventory; and
• A minority of issuers, the same ones as reported in the 2021 Report, sold debt in the
current survey period as well. No additional issuers expressed an intent to sell going
forward.
Figure 33 shows the share of post-charge-off balance inventory allocated to each recovery
channel by issuers during the survey period. Surveyed issuers reported holding an average of 28
percent of their overall post-charge-off balance inventory in warehouse status, unchanged from
2019 and 2020. Issuers reported placing 14 percent of their post-charge-off inventory with
third-party agencies, down from 18 percent in 2019 and 2020. Third-party placement share
ranged from one percent to 47 percent. Internal recovery ranged from less than one percent to
72 percent.
$25B
$28B
$36B
$39B
$42B
$38B
$32B
$37B
2015 2016 2017 2018 2019 2020 2021 2022
$0
$10B
$20B
$30B
$40B
150 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 33: SHARE OF POST-CHARGE-OFF BALANCE INVENTORY BY RECOVERY CHANNEL, 2021 AND
2022 (MMI)
307
On average, issuers litigated 13.5 percent of their post-charge-off balance inventory. Issuers
reported that 25 percent of their inventory was time-barred.
308
Finally, as noted in our previous
four reports, the same minority of issuers reported leveraging debt sales as part of their post-
charge-off recovery strategy. Those issuers who sold debt reported selling an average of 3.6
percent of their total post-charge-off balance inventory, down from five percent in 2019 and
2020. Among issuers who sold debt, a significant share of debt was sold at the time of charge-
off. In 2021, issuers who sold debt reported that, on average, 38 percent of their total sales was
fresh charge-off debt, ranging from a low of 23 percent to a high of 46 percent. Post-pandemic,
issuers in 2022 reported that, on average, 47 percent of their total sales was fresh charge-off
debt, with a range in responses from 40 to 57 percent.
INTERNAL RECOVERY
Although internal recovery can be less confusing for consumers than third-party collections,
since consumers already have a relationship with the issuer, internal recovery is not a significant
piece of most issuers’ overall recovery strategy for post-charge-off debt. In Q4 2022, most
issuers placed less than ten percent of post-charge-off balances in internal recovery. However,
one issuer chose to retain 60 percent of its post-charge-off inventory during Q4 2022. This is a
307
Green bars represent the average share of post charge-off balances inventory. The issuers provided the status of
post-charge-off balance inventory as of the end of each quarter in 2021 and 2022. The distributions for 2021 and
2022 were averaged by issuer, and then averaged across issuers (weighted by total receivables). Black lines running
through each bar represent the range of the share of post charge-off balances only for issuers that used that channel.
In other words, the ranges do not include zero values, since some issuers did not use that channel. The “Other”
category includes the probate channel, and the “Internal” category includes both internal and first-party collections.
308
Time-barred debt means a debt for which the applicable statute of limitations has expired. See 12 CFR
1006.26(a)(2).
28.4%
23.7%
24.9%
13.5%
13.9%
8.4%
18.8%
3.3%
3.6%
Warehoused Other Time-
barred
Litigation Third-
party
First-
party
Internal Probate Sales
0%
10%
20%
30%
40%
50%
60%
70%
151 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
notable departure from the last survey period, in which the maximum internal placement rate
by any issuer was 20 percent.
THIRD-PARTY RECOVERY
All surveyed issuers employed third-party agencies to recover post-charge-off debt on a
contingency-fee basis. Issuers reported placing between one percent and 29 percent of their
charged-off balances with third-party agencies during Q4 2022. Issuers described several
reasons for placing charged-off debt with third-party agencies, including improved recovery,
internal resource constraints, and the need for specialized expertise in recovering certain
“special segments” of debt (e.g., debt owed by deceased consumers or accounts with cease
communication requests from the debtor).
Recovery performance is measured by the “cumulative recovery rate,” which is the share of the
charged-off balance that has been recovered since the debt was charged-off. Recovery on
charged-off debt can occur over several months or years. As the debt ages, and as the account
moves from one placement to another, the incremental share of the charged-off balances that
the issuer expects to recover from that account generally decreases.
Figure 34 shows that most recovered post-charge-off debt is recovered during the first year
following charge-off. After nearly five years of recovery efforts, approximately 16 percent of the
balance owed is recovered, of which about ten percent was recovered within the first year alone.
Figure 34 also shows that recovery performance has been improving over time for debts that
charged off between 2018 and 2022. For debt that charged off in the second quarter of 2018,
issuers recovered an average of 12 percent of the charged-off balance in the first two years
following charge-off. However, for debt that charged off in the second quarter of 2020, issuers
recovered an average of 14 percent in the first two years. This improved performance may be
partially attributable to pandemic stimulus, forbearance programs, and unemployment
insurance programs which improved household finances among low-income consumers in 2021,
with some effect continuing into 2022.
152 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 34: CUMULATIVE RECOVERY RATES FOR QUARTERLY VINTAGES BY MONTHS FOLLOWING
CHARGE-OFF (MMI)
309
6.8.4 Debt sales
Some credit card issuers sell charged off credit card debt to pre-selected debt buyers, receiving a
fraction of the outstanding account balances sold. Typically, these sales are structured as
“forward-flow” contracts, where a pool of accounts that meet a pre-determined criteria are sold
on an ongoing (e.g., monthly, quarterly) basis. Issuers may sell other special segmented
accounts such as where the issuer has received a notice of bankruptcy, or the consumer is
deceased, where a specialized expertise may be required to service the amount owed. The 2021
Report noted that creditors, upon sale of the debt, updated the accounts to the credit reporting
agencies as “Sold/Transferred” with a $0 balance.
310
However, the current study found that all
sellers are deleting the tradeline in its entirety.
MARKET STRUCTURE
The general trend of consolidation among an issuer’s debt buyer network seems to continue in
the current survey period. The number of unique debt buyers declined from 20 in 2016 to 15 in
2022. The average number of debt buyers per issuer who sold debt remained steady at nine with
the range of seven to ten. The four largest debt buyers were reported doing business with all
issuers that sold debt in the survey period.
309
Here, each “quarterly vintage” represents balances for all accounts which charged off at any time during the given
quarter. Cumulative recovery includes all proceeds collected post-charge-off, including through third-party
collections, litigation, and debt sales.
310
2021 Report, supra note 3, at 149.
17.3%17.5%
15.6%
11.3%
3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51
0%
3%
6%
9%
12%
15%
18%
2018Q4 2019Q4 2020Q4 2021Q4
153 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
DEBT SALE VOLUME
Fewer than half of issuers surveyed sold debt in 2021 and 2022, unchanged from the 2017 and
2019 Reports. Issuers that reported that they did not sell debt in 2021 and 2022 also indicated
that they have no plans to do so in 2023. Most issuers that sold debt during 2022 reported that
they planned to sell roughly the same amount as in prior years. However, both of the largest
debt buyers in the U.S., PRA Group (“PRA”) and Encore Capital Group (“Encore”), increased
purchasing volumes in Q1 2023, suggesting a positive industry outlook for the debt buying
industry.
The issuers that sold debt in 2021 and 2022 indicated that they planned to continue to sell
mostly fresh charged-off and bankruptcy debt in 2023. In 2022, issuers that sold debt reported
selling an average of 20 percent of all their fresh charge-off debt, with a range from 16 to 23
percent. Freshly charged off debt generally liquidates at among the highest levels, and therefore
commands higher prices than many other forms of sold debt, with an average price of $0.14 in
2021 and an average price of $0.16 per dollar of the balance sold in 2022. Bankruptcy debt
varies in liquidation rate and price depending on bankruptcy type, with prices for Chapter 13
debt generally significantly higher than Chapter 7 debt. In 2022, respondents reported selling
Chapter 7 bankruptcy debt for an average of $0.10, compared to an average of $0.25 for Chapter
13 bankruptcy debt.
Issuers that sold debt in 2021 and 2022 reported that over those two years, they sold roughly
four percent of post-charge-off inventory, down from five percent as reported in our 2021
Report. This aligns with Q1 2023 earnings reports by the two largest debt buyers, PRA and
Encore, citing lower collections resulting from fewer portfolio purchases from previous periods
and the post-pandemic economic environment.
311
Figure 35 compares the distribution of total post-charge-off inventory by recovery channel for
issuers that did and did not sell debt in 2021 and 2022. Issuers that did not sell debt kept a
greater portion of their post-charge-off balances in their internal recovery and legal channels.
All issuers held a significant share of debt in the warehouse category, but debt sellers kept
higher percentages, perhaps awaiting ad hoc sale decisions. Issuers who sell debt do so well
before accounts reach time-barred status.
311
Seeking Alpha, PRA Group, Inc. (PRAA) Q1 2023 Earnings Call Transcript, (May 8, 2023),
https://seekingalpha.com/article/4601739-pra-group-inc-praa-q1-2023-earnings-call-transcript; Seeking Alpha,
Encore Capital Group Inc. Q1 2023 Earnings Call Transcript, (May 3, 2023),
https://seekingalpha.com/article/4599737-encore-capital-group-inc-ecpg-q1-2023-earnings-call-transcript.
154 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
FIGURE 35: SHARE OF CHARGED-OFF BALANCE INVENTORY BY CHANNEL FOR ISSUERS THAT DID AND
DID NOT SELL DEBT (MMI)
DEBT PRICE
The overall average price of debt increased from 14 percent to 16 percent of balance owed or
“face value,” between 2021 and 2022 because of reduced supply over the pandemic period
coupled with high demand from debt buyers. Figure 36 shows the average price of debt by type.
Charged-off debt generally sells for a fraction of the account face value, at a price largely
dependent upon the age of the debt. Additionally, certain special segments of debt, such as
accounts for which the issuer has received notice of Chapter 13 bankruptcy, may command
higher prices. The price of bankruptcy accounts is above the overall average price of other debt
sold, presumably because the buyer may be able to recover a larger portion of the debt by filing
proofs of claim as part of the bankruptcy process. However, the price of freshly-charged-off debt
increased from 12 percent in 2019 to 16 percent of face value in 2022, equal to the previous high
reported in 2016.
FIGURE 36: AVERAGE PRICE OF DEBT SOLD AS A PERCENTAGE OF ACCOUNT BALANCE BY TYPE OF
DEBT SOLD (MMI)
15%
4%
10%
42%
4%
13%
28%
15%
20%
Third-party Internal Litigation Warehouse Sale
0%
10%
20%
30%
40%
Issuers that sold debt Issuers that did not sell debt
14%
15%
12%
16%
19%
16%
16%
12%
14%
22%
Overall Fresh Charge-off Post-primary Cease & Desist Bankruptcy
0%
5%
10%
15%
20%
25%
2021 2022
155 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Debt sold after one or more placements fetched lower prices (12 percent for post-primary versus
16 percent for fresh charge-off) which is slightly higher than what we reported previously.
Accounts where the collector received a request to cease and desist communications was priced
at 16 percent in 2021 and 14 percent in 2022, which was higher than the 13 percent reported in
the 2021 Report. Accounts for which there was a bankruptcy sold for a significantly higher price
of 19 percent in 2021 and 22 percent in 2022 compared to 14 percent in 2018, suggesting higher
liquidity of this segment.
DEBT SALE CONTRACTS
All survey respondents that sold debt reported that they provide buyers with key documents and
account information at the time of sale, including the account’s last 12 statements, and amount
and date of the last account payment, in compliance with OCC Bulletin 2014-37.
312
After the
debt is sold, issuers reported that they may provide additional documentation at the buyer’s
request, including cardholder agreements, written applications, affidavits, balance transfer
check copies, and earlier account statements. While most issuers who sold debt reported that
debt buyers do not pay a fee to access these documents, a minority reported charging a fee (ten
cents on average per document) to provide additional documentation. All surveyed issuers that
sold debt also stated that they send out “goodbye” letters to the cardholder. These letters inform
borrowers of the sale and provide the name and contact information of the buyer.
Debt sale contracts generally do not restrict debt buyers from reporting to credit reporting
agencies as the new debt owner. Instead, the contracts require that the buyer adhere to all Fair
Credit Reporting Act requirements.
6.8.5 Litigation
All surveyed issuers reported using litigation strategies for both pre- and post-charge-off
accounts. Less than half of issuers reported initiating litigation proceedings prior to charge-off.
Issuers select accounts for litigation based on factors such as account balance, and estimated
likelihood of payment (indicated by the presence of assets and employment income).
The issuers used an extensive network of attorneys to support their litigation strategy in
collection. Respondents reported using 98 unique attorney law firms in 2022 to collect debt
owed. Part of the reason for a higher number of firms is based on licensing and justification of a
firm’s coverage of specific states. The average number of attorney law firms used per issuer
remained steady at 22 during the survey period, though the range varied from six to 35. Eleven
312
See OCC Bulletin 2014-37, (Aug. 4, 2014), https://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014-
37.html.
156 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
law firms were employed by more than half of the surveyed respondents. Respondents said that
they do not allow law firms to report collection accounts to the credit bureaus.
The average volume of new balances placed in the litigation channel by issuers was steady over
the survey period, at 12 percent in both 2021 and 2022. This rate is not inclusive of litigation by
debt buyers; balances sold by issuers to debt buyers may subsequently be litigated. Across
issuers, litigated balances as a percentage of total post-charge-off inventory ranged from a low of
three percent to a high of 25 percent. Although issuers have increased litigation volume since
2020, volume is still well below the pre-pandemic level, which was at 17 percent in 2017-2018.
313
Survey respondents generally selected higher-balance accounts from their portfolios for
litigation. Average post-charge-off litigated account balances ranged from $4,587 to $10,980
across issuers during the current survey period, compared to the range of $2,700 to $12,300
during the previous report period. Pre-charge-off litigated account balances were higher on
average, with average balances ranging from $6,415 to $12,706 across issuers, compared to
$940 to $5,800 during the previous report period.
DEFAULT JUDGMENTS
A default judgment is a ruling in favor of the plaintiff (collector) when the defendant (consumer)
has failed to respond to a summons or to appear in court. More than half of surveyed issuers did
not report default judgments separately from other judgments. However, respondents who do
track default judgments separately reported that more than 69 percent of all judgments entered
were default judgments. This ratio was consistent with our previous reports.
LITIGATION RECOVERY
After a creditor has won a judgment on a litigated collection account, recovery may occur over a
prolonged period. To recover the debt, the issuer may exercise a wage garnishment, attach a
bank account, or place a judgment lien on real property against the debtor or ask the debtor to
enroll in a payment plan. Thus, litigation that results in a judgment generally produces a steady
stream of recoveries from accounts with judgments against them, spread over a longer time that
may span several years.
Figure 37 shows the cumulative recovery rate by months since judgment for accounts where a
judgment was obtained between 2017 and 2022. Issuers recovered an average of 32 percent of
all judgment balances at 60 months since the judgment was received, the longest performance
window captured in the survey. Accounts with judgments may have higher cumulative recovery
rates because issuers disproportionately litigate more accounts with a higher ability to repay,
which depends on borrowers’ assets, employment, and other income. Cumulative recoveries
313
2019 Report, supra note 3, Figure 5, at 153.
157 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
from judgment accounts increased steadily over time as each vintage ages and a consistent flow
of payments are applied to the account. Accounts with default judgments generally had lower
cumulative recovery rates than those with non-default judgments as noted in Figure 37 below
(32 percent compared to 44 percent at 60 months since judgment).
FIGURE 37: CUMULATIVE RECOVERY RATES BY MONTHS SINCE JUDGMENT WAS RECEIVED (MMI)
6.8.6 Vendor network and compensation
All surveyed issuers monitored their vendors’ collections performance, both relative to the
issuer’s stated targets and to the performance of other agencies in the network. Some issuers
prohibit or strictly limit their third-party collectors from using text to initiate contact with
borrowers in post-charge-off collections. Only a minority of the surveyed issuers reported that
they sent an agency placement notification letter to the consumer at the time of placement to
provide contact information for the agency, so most consumers are not aware that the debt has
been placed with the collection agency before they are contacted.
On average, issuers reported keeping 96 percent of
pre-charge-off debt balances to be worked
in-house and by first-party collectors, with the remaining four percent placed with third-party
collectors.
314
The number of unique first-party agencies used across issuers remained relatively
stable, with 18 unique agencies in both 2021 and 2022, the same figure as reported in prior
survey reports as well. While the average number of unique first-party agencies per issuer
314
These figures represent the percentage of pre-charge off balances that each issuer retained for in-house and first-
party collections and placed with third-party collectors, averaged across all issuers.
43.5%
32.3%
3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60
0%
10%
20%
30%
40%
Non-default judgment Default judgment Overall
158 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
remained stable at four in 2021 and 2022, the range widened from one to six in 2020 to two to
eight in 2022. The services of one agency were used by half of the respondents.
Almost all surveyed issuers worked with third-party contingency collectors for their pre- and
post-charge-off collections, though the network of agencies used decreased compared to prior
reports. All surveyed issuers reported using a combined total of 34 unique third-party agencies
in 2021 and 30 in 2022. Issuers that used third-party agencies reported employing eight unique
third-party agencies on average in 2022, with a low of four to a high of 13. The services of four
agencies were used by half of the respondents in 2020.
Typically, first-party vendors are paid on a productive full-time-employee (FTE) basis while
third-party vendors are paid a contingency fee as a percentage of the amount of debt collected.
Based on the limited survey response received on compensation for first-party collectors, we
note that an average first-party FTE is paid between $2,600 to $4,600 per month. The range
may reflect the location of the FTE agents, as off-shore and near-shore labor costs are often
lower than on-shore. Only half of issuers reported using third party collectors in the pre-charge-
off space, while all issuers reported using them in post-charge-off collections. These issuers paid
their third-party collectors an average of 14 percent as contingency fee for pre-charge-off
collections and this fee remained constant between 2021 and 2022. This is lower than the
average third-party pre-charge-off contingency fee of 15.7 percent in 2020, and 15.3 percent in
2018.
Contingency fees for post-charge-off third-party collectors depend on the level of placement
(e.g., primary, secondary, tertiary, and quaternary), with later placements typically receiving
higher contingency fees as the debt ages and recovery becomes more difficult. Contingency fees
paid for various placements remained constant during the survey period. In 2022, issuers paid
an average of 21 percent for primary, 27 percent for secondary, 30 percent for tertiary, 36
percent for quaternary placements. Among issuers, contingency fees ranged from 19 to 25
percent for primary placement, from 17 to 31 percent for secondary placement, from 25 to 40
percent for tertiary placement, and from 23 to 47 percent for quaternary placement.
159 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
7. Innovation
The CFPB’s Congressional mandate to study the credit card market specifically instructs us to
review “credit card product innovation.”
315
As in prior Reports, we will cover both innovations
involving traditional credit cards as well as other innovations from adjacent or overlapping
consumer financial markets that have affected the traditional credit card market.
First, this section summarizes innovations discussed in earlier sections of the Report. Second,
we highlight recent developments in the market for traditional credit cards, such as the
emergence of credit card-as-a-service platforms. Finally, considering this Report’s greater focus
on competition, we conclude by illustrating how new products and services introduced in
adjacent or overlapping consumer financial markets often spur innovation or imitation among
traditional credit card issuers.
316
7.1 Innovations discussed above
Throughout this report, we refer to several developments and trends relating to
innovation in the credit card lifecycle.
Section 6.1 covers notable developments in credit cards rewards programs since our
last Report;
Section 6.2 notes the prevalence and characteristics of installment plans offered in
connection with traditional credit card accounts. As discussed in Sec. 7.4, many
credit card issuers began offering these installment plan options following growth in
the availability of similar products: unsecured personal loans, BNPL products, and
point-of-sale installment loans; and
Section 6.7 discusses how developments in digital account servicing have changed
the cardholder experience.
315
15 U.S.C. 1616(a)(4)(D) (2012).
316
Congress established the CFPB’s statutory purpose as ensuring that all consumers have access to markets for
consumer financial products and services and that markets for consumer financial products and services are fair,
transparent, and competitive. See 12 U.S.C. § 5511(a) (2012). The CFPB’s objectives include exercising its authorities
for the purpose of ensuring that markets for consumer financial products and services operate transparently and
efficiently to facilitate access and innovation. See 12 U.S.C. § 5511(b)(5).
160 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
7.2 Recent developments
This section addresses recent developments and innovations within the credit card market.
First, we discuss credit card-as-a-service platforms, which seek to streamline the process of card
issuance for retailers and other merchants. Second, we cover the growing use of “soft credit
inquiries” in underwriting, which may facilitate credit card shopping and, in turn, bolster
competition. Finally, we highlight other developments in the credit card industry related to
repayment terms, the physical form of credit cards, digital payments through mobile wallets,
and efforts to expand credit card access for those consumers with limited credit history on file
with the consumer reporting agencies.
7.2.1 Credit card-as-a-service platforms
As discussed in section 2.3, partnerships between card issuers and merchants are not new, but a
new breed of partnership, facilitated by credit card-as-a-service platforms, seeks to streamline
the process of issuing merchant-branded cards.
317
Credit card-as-a-service platforms advertise
their use of application programming interfaces (APIs) and other technology to help merchants
offer branded cards to their customers and issue customized rewards. Meanwhile, these
platforms allow those same customers to manage their card accounts through the merchant’s
website or mobile app. The platforms also tout their ability to lower the cost of and shorten the
typical timeframe associated with creating a branded card program.
318
This may appeal to
smaller retailers and banks that seek to implement their own branded payment option but find
it difficult to either issue cards on their own or develop a partnership with a large bank or credit
card issuer.
Like many traditional card partnerships, merchants turn to credit card-as-a-service platforms to
offer a merchant-branded financing option to customers, in the hope that doing so drives
further spending and engagement with the merchant. Merchants using these platforms also
similarly monetize customers’ use of their cards by retaining a share of the interchange fees
associated with each purchase
319
and leveraging data from customers’ purchase histories. The
317
See Suman Bhattacharyya, Inside Marqeta’s plans to grow its ‘card-as-a-service’ offering, Payments Dive (March
2, 2021), https://www.paymentsdive.com/news/inside-marqetas-plans-to-grow-its-card-as-a-service-
offering/595965/.
318
Business Wire, First National Bank of Omaha Launches Credit Card-as-a-Service Solution (August 30, 2022),
https://www.businesswire.com/news/home/20220830005403/en/First-National-Bank-of-Omaha-Launches-
Credit-Card-as-a-Service-Solution.
319
Simplifipay, What is Card as a Service – A Simple Explainer for Businesses (Feb. 25, 2022),
https://simplifipay.com/what-is-caas/.
161 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
combination of fee revenue and purchase data allows some merchants to target individual
cardholders with specific rewards based on their purchase activity in an effort to drive further
spending.
The speed at which credit card-as-a-service platforms enable card account issuance may also
generate new use cases for consumers and businesses. Credit card-as-a-service providers may
derive a competitive advantage through newer technology and improved user experience
without the technical challenges many major issuers may face when updating legacy systems.
Using a credit card-as-a-service platform, for example, an airline can push a time-restricted
virtual corporate card from its app to the mobile wallet of a traveler at the airport, who can then
use it to pay for a hotel or meals after a flight cancellation.
320
The card is then automatically
deactivated when the passenger gets on the new flight.
With a credit card-as-a-service platform arrangement, merchants, banks, and non-banks work
together to provide all aspects of credit card account management, from origination to servicing.
Merchants do not typically set the underwriting criteria for a co-brand partnership in a credit
card-as-a-service platform arrangement unless the merchant is providing the underlying
funding for receivables via their own balance sheet. Instead, the bank or non-bank lender that
funds the credit card receivables – and collects interest income from the cardholder –
determines the creditworthiness cutoff for new cards with certain profitability targets in mind.
The credit card-as-a-service provider charges a fee associated with each origination, while the
merchant partner collects a share of interchange fees.
321
In many cases, credit card-as-a-service
providers partner with a bank to issue cards and make corresponding loans, but investors
provide funding for those loans.
322
In this scenario, the bank originating the loans may not hold
a significant portion of those loans on its balance sheet, as they have been sold to investors.
Partnerships with credit card-as-a-service platforms have grown since our last Report, though
recent news suggests that the growth rate of such partnerships has tapered off in recent months.
320
U.S. Bank, Company Blog, With Card as a Service, U.S. Bank sparks more innovation in digital payments (Dec.
10, 2021), https://www.usbank.com/about-us-bank/company-blog/article-library/with-card-as-a-service-us-bank-
sparks-more-innovation-in-digital-payments.html.
321
Market monitoring suggests CCaaS revenue sharing agreements are oftentimes less generous to merchant partners
than traditional co-brand partnerships described in section 2.3.
322
CCaaS loans are typically originated by a “bank partner” that operates on the CCaaS platform. Platform lending
models that involve a bank partner have raised questions about the “true lender” in those models. These questions
may be particularly pertinent if interest rates for a loan originated through the platform exceed a state’s interest rate
cap for that product. See, e.g., Colorado Attorney General, Press Release, Colorado Attorney General’s Office settles
lawsuit against lenders for exceeding state interest rate limits on consumer loans (Aug. 18, 2020),
https://coag.gov/press-releases/8-18-20/ (alleging that non-banks Avant and Marlette illegally partnered with two
out-of-state banks—WebBank and Cross River Bank, respectively—in a scheme to “rent” those banks’ ability to lend
above Colorado’s rate limits).
162 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Recently, some credit card-as-a-service offerings have been pulled from the market because of
financial issues related to the product or merchant.
323
In the modular and decentralized system
that credit card-as-a-service supports, problems with one partner (whether merchant, third-
party vendor, bank, or non-bank investor) can introduce new risks for consumers if, for
example, cardholders become unable to make a payment or lose access to accounts with the
failure of one link in the chain.
Some credit card-as-a-service platforms advertise themselves as an efficient “one-stop-shop” for
merchants looking to launch their own credit card program.
324
This means that the credit card-
as-a-service platform is often relied upon for critical functions such as account management,
customer service, or legal and regulatory compliance. In practice, however, many of these
critical functions are outsourced to third-party vendors that provide services to the platform. It
remains to be seen whether the efficiencies claimed by these platforms are matched by effective
execution of these important functions.
7.2.2 Soft credit inquiries
During a typical credit card application process, the applicant provides the issuer with personal
information that enables the issuer to check the applicant’s credit history with one or more
consumer reporting agencies. The consumer reporting agency then records the credit inquiry on
the applicant’s credit report, regardless of whether the applicant is ultimately approved by the
issuer. These “hard” credit inquiries on the applicant’s credit report can lower consumer credit
scores, all else being equal.
325
Some issuers are beginning to use “soft” credit inquiries – which are currently designed not to
impact credit scores – when determining whether an applicant is approved for a card.
326
American Express, for example, notes that for some of its products, “applicants will be told with
100% certainty if they are approved – without any impact to their credit score,” and that a hard
323
See Craig Joseph, Niche Credit Card Rewards Were Having a Moment — What Happened?, NerdWallet (May 17,
2023), https://www.nerdwallet.com/article/credit-cards/niche-credit-card-rewards-face-growing-pains.
324
Skaleet, Card-as-a-Service: Launch Card Programs for your Customers! (Sept. 12, 2022),
https://skaleet.com/en/blog/card-as-a-service-launch-card-programs-for-your-cu stome rs/.
325
See CFPB, What’s a credit inquiry? (last reviewed September 4, 2020), https://consumerfinance.gov/ask-
cfpb/whats-a-credit-inquiry-en-1317/.
326
Id.
163 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
inquiry will only be made after the applicant is approved for and accepts a card.
327
Other issuers
also claim to rely on soft credit pulls to evaluate eligibility, including issuers of the Apple
Card,
328
Discover cards,
329
the Venmo credit card,
330
and the X1 card.
331
For many borrowers, the use of soft credit inquiries alters the credit card shopping and
application process. For borrowers in the shopping process who are unsure of their
qualifications, the use of soft inquiries may encourage such borrowers to check their eligibility
for a card with better terms rather than applying only for cards for which they may be more
likely to qualify. Borrowers who are not approved following a soft pull can move on to the next
card application with less concern that the denial has affected their credit score or reduced their
likelihood of approval for their next card.
In cases where issuers institute an additional step after approval but prior to account opening,
borrowers who are approved after a soft inquiry are not required to accept that card offer and
may be more likely to consider other cards with better terms.
332
This contrasts sharply with the
more typical underwriting process whereby an account is opened automatically after an
applicant is approved via a hard inquiry, and a consumer must then close the account if they do
not wish to accept the terms offered.
Many issuers using soft inquiries appear to be providing applicants with only the approval or
denial decision without a precise APR or credit line offer.
333
If issuers use soft credit inquiries to
327
American Express, Press Release, Find Out if You Are Approved for an American Express Personal Card Before
Impacting Your Credit Score (Nov. 21, 2022), https://about.americanexpress.com/newsroom/press-releases/news-
details/2022/Find-Out-if-You-Are-Approved-for-an-American-Express-Personal-Card-Before-Impacting-Your-
Credit-Score/default.aspx.
328
Apple, How your Apple Card application is evaluated, https://support.apple.com/en-us/HT209218 (last
accessed Mar. 13, 2023).
329
Discover, See if you’re preapproved with no harm to your credit,
https://www.discovercard.com/application/preapproval/initial? (last accessed June 21, 2023).
330
Venmo, https://venmo.com/about/creditcard/apply1/ (“Apply for the Venmo Credit Card with no impact to your
credit bureau score if you’re not approved.”) (last accessed Mar. 13, 2023).
331
X1 Card, https://x1creditcard.com/ (“See if you’re approved with no impact to your credit score”) (last accessed
Mar. 13, 2023).
332
Not all issuers offering approval via soft pulls provide consumers with this affirmative acceptance step. See, e.g.,
Venmo, https://venmo.com/about/creditcard/apply1/ (“An approved Venmo Credit Card application will result in a
hard credit inquiry, which may impact your credit bureau score.”) (last accessed June 23, 2023).
333
Currently, many issuers engage in risk-based pricing and advertise their products with a range of APRs, but the
specific APR the applicant will actually receive remains unknown to the applicant until they have been approved.
164 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
disclose an applicant’s APR or credit line, as some currently do, this greater certainty could
provide consumers with an important means of comparing credit card pricing and credit line
amount without negatively impacting their credit scores.
While the use of soft credit inquiries for credit card underwriting appears to be growing, it is
important to note that other credit markets address the impact of hard inquiries differently, and
that a loss of hard inquiry information may affect certain credit scoring models. For example,
when a consumer shops for a mortgage, multiple credit checks from mortgage lenders within a
45-day window are usually scored as a single inquiry.
334
This is in part because most consumers
only finance one home at a time. Accordingly, consumers can shop around and get multiple
preapprovals and official loan estimates with the same impact on their credit score regardless of
the number of mortgage applications they make, as long as the last credit check is within 45 days
of the first credit check. In unsecured credit markets where consumers apply for more than one
loan at a time, such as personal loans and credit cards, moving away from hard credit inquiries
en masse may affect credit scoring models that previously relied on hard inquiry data as a proxy
for credit seeking behavior. On the other hand, if only select issuers make approval decisions
based on soft pulls, certain applicant segments – such as subprime borrowers – may
disproportionately face the prospect of score degradation resulting from hard pulls.
Consumers and industry participants should also distinguish between the use of soft credit pulls
to determine eligibility with “100% certainty,” as discussed above, from less certain
determinations. In early 2023, the Federal Trade Commission (FTC) issued a consent order to a
credit services company for allegedly misrepresenting that consumers were “pre-approved” for
credit card offers.
335
The FTC alleged that these purported pre-approvals conveyed false
certainty to consumers who ultimately did not qualify for the advertised credit cards and
subjected them to unnecessary credit checks.
336
334
CFPB, What exactly happens when my mortgage lender checks my credit? (Mar. 3, 2017),
https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-
2005/ (last accessed Mar. 13, 2023).
335
Federal Trade Commission, Press Release, FTC Finalizes Order Requiring Credit Karma to Pay $3 Million and
Halt Deceptive ‘Pre-Approved’ Claims (Jan. 23, 2023), https://www.ftc.gov/news-events/news/press-
releases/2023/01/ftc-finalizes-order-requiring-credit-karma-pay-3-million-halt-deceptive-pre-approved-cl aims.
336
Id.
165 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
7.3 Additional developments
7.3.1 New repayment terms
Since our last Report, some issuers have begun offering payment cards with repayment terms
that differ somewhat from those of typical credit card accounts available today. One personal
loan provider offers a card described as allowing “[the cardholder] to obtain a series of closed-
end loans” accessed through card transactions,”
337
whereby each purchase that is not paid off
immediately is subject to a fixed interest rate and repayment term. Unlike most credit cards, this
product does not provide cardholders with a “grace period” – the balance from any purchase will
accrue interest if not repaid immediately. While some issuers offer optional installment plans
for certain purchases the cardholder selects, this product appears by default to fund all card
transactions through installment loans.
Another approach is to extend the typical time period during which cardholders can avoid
paying interest on purchases. Under many credit card agreements, cardholders will not be
charged interest on new purchases if the entire balance is paid by the statement due date each
month. One forthcoming product purports not to charge “any interest on purchases which are
paid in full within the four billing cycles after the billing cycle in which they posted,” as long as
the cardholder pays the minimum due each month by the due date.
338
While many issuers have
offered zero-percent APR promotions for a certain period of time, these are typically ad hoc
promotions that often occur at account opening, and typically only apply to balances accrued or
transferred during the promotional term.
Repayment mechanisms may implicate an array of regulatory provisions. The CFPB will
continue to monitor new mechanisms to ensure consumers are adequately informed about
financial offerings, that consumers are protected from risky practices, and that markets continue
to provide consumer-beneficial innovation and competition.
7.3.2 Credit card form factors
The physical form of credit card transactions is also changing. In addition to the growing use of
mobile wallets and smartphones at the point-of-sale, which is discussed further in Section 7.3.3,
337
Upgrade, fn. 3 (“The Upgrade Card is unique in that it allows you to obtain a series of closed-end loans which you
may access through transactions such as card purchases up to the approved line amount.”),
https://www.upgrade.com/upgrade-card/ (last accessed Mar. 13, 2023).
338
Eve Financial, Eve Credit Card Important Disclosures, https://card.eve.co/apply/cardmember-
agreement?public=true (last accessed Mar. 13, 2013).
166 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
companies are increasingly issuing customers virtual card numbers in addition to, or in lieu of,
physical cards. The use of these virtual cards is also becoming more prevalent with Buy Now,
Pay Later offerings, which are discussed in Section 6.2. With virtual card numbers, card
applicants can transact immediately upon approval and assign virtual cards to particular
merchants or transactions. This may enable greater control over transactions, such as by making
it easier for customers to cancel recurring subscriptions or free trials by closing the virtual card
number associated with the original transaction.
339
The availability of virtual card numbers may
also help reduce fraud if the use of a specific number is limited to specific transaction types,
dollar amounts, or time periods.
In the realm of physical cards, several companies have been adding new functionality intended
to enhance card-related accessibility. One firm has created a “talking card” for visually impaired
people who cannot verify the transaction amount keyed in by the cashier at the point of sale.
340
The card connects via Bluetooth to a mobile phone, which then tells the cardholder the amount
displayed on the card payment terminal. In a separate initiative, Mastercard introduced in late
2021 a card with distinctive notches on the short side of the card to help visually impaired
cardholders distinguish between debit, credit, and prepaid cards and correctly orient them at
the payment terminal.
341
For issuers, adding these new functionalities to the traditional credit
card form factor may improve service to cardholders with visual impairments.
7.3.3 Mobile and online payment wallets
The availability of digital payment wallets that allow consumers to store payment information
and make payments online or via their smartphones has grown significantly since our 2015
Report, the first in our series that discussed such payments.
342
According to a 2022 McKinsey
survey on digital payments, more than two-thirds of Americans are expected to have a digital
wallet within two years, with 30 percent intending to use three or more digital wallets in the
339
See Frequent Miler, X1 Card Review (Feb. 10, 2023), https://frequentmiler.com/x1-card-review-up-to-4x-
everywhere-its-here-its-real/.
340
See John Laurenson, Talking credit cards help visually impaired people prevent abuse, Marketplace (Jan. 31,
2023), https://www.marketplace.org/2023/01/31/talking-credit-cards-help-visually-impaired-people-prevent-
abuse/.
341
Mastercard, Press Release, Mastercard introduces accessible card for blind and partially sighted people (Oct. 25,
2021), https://www.mastercard.com/news/press/2021/october/mastercard-introduces-accessible-card-for-blind-
and-partially-sighted-people/.
342
2015 Report at 277-283.
167 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
coming years.
343
FIS has also estimated that, in the U.S. and Canada, use of digital wallets
comprised 29.2 percent of e-commerce transaction value in 2021 and 10.3 percent of point-of-
sale transaction value, with those shares estimated to rise to 33 percent and 15 percent,
respectively, by 2025.
344
Digital payment wallets rely on an ecosystem of providers, including phone manufacturers,
software developers, banks, card networks, and retail stores.
345
Depending on which entities are
involved, a digital wallet can vary along multiple dimensions, including: how the digital wallet is
accessed (e.g., through a particular smartphone, app, or in-browser experience); the funding
source for the wallet (e.g., credit/debit cards, bank accounts, or retail rewards programs); and
level of acceptance (e.g., in-store, peer-to-peer, or in-app/in-browser).
346
One prominent digital wallet type consists of the “Pay” wallets, which includes Apple Pay,
Google Pay, and Samsung Pay.
347
Available to consumers who use an eligible mobile device,
users of a Pay wallet add payment card information to the wallet and leverage their mobile
device to initiate transactions at participating merchants in-store and online. Mobile wallet
transactions may result in revenue sharing with the Pay wallet provider: for example, card
issuers pay Apple a percentage of each purchase made by cardholders who use Apple Pay;
issuers currently do not pay fees to other Pay wallet providers.
348
For merchants, accepting one mobile wallet typically requires them to accept all mobile wallets
using the same payments technology. Under current network guidelines, if a merchant accepts
any contactless payments that rely upon near-field communication (NFC) technology, including
some physical cards and mobile wallets like Apple Pay or Google Pay, they cannot refuse to
accept the same network’s payments from other payment devices using NFC technology, even if
they differ in costs or risks.
349
A few major retailers still do not allow contactless payments in
343
Lindsey Anan, et al., Consumer Trends in Digital Payments, McKinsey & Co. (Oct. 21, 2022),
https://www.mckinsey.com/industries/financial-services/our-insights/banking-matte rs/consumer-trends-in-
digital-payments.
344
FIS, The Global Payments Report (2022), 35.
345
2017 Report at 339.
346
Id. at 339-340.
347
Id. at 340.
348
See AnnaMaria Andriotis, Apple Pay Fees Vex Credit-Card Issuers, Wall St. J. (Oct. 5,
2021),https://www.wsj.com/articles/apple-pay-fees-vex-credit-card-issuers-11633449317.
349
See Adam J. Levitin, Pandora’s Digital Box: The Promise and Perils of Digital Wallets, 166 U. Pa. L. Rev. 305
(2018), available at https://scholarship.law.upenn.edu/penn_law_review/vol166/iss2/1/.
168 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
store, as the high cost of upgrading point-of-sale systems alongside concerns about higher fees
for transactions using NFC technology may outweigh consumer demand to “tap-to-pay.”
350
Credit card issuers and networks are both cooperating and competing with mobile wallet
providers. Some issuers have made it easier for customers to add credit cards directly to their
Pay wallets, such as through the issuers’ own proprietary apps or online portals.
351
Issuers have
also incentivized cardholders to use their cards in Pay wallets with bonus rewards such as
additional cash back,
352
in an apparent effort to establish themselves as the preferred payment
method in Pay wallets.
At the same time, large banks are collaborating on a competing digital wallet that can be used to
shop online.
353
The service would allow users to pay at participating merchants’ online
checkouts using debit or credit cards added to the wallet, without the need to enter actual credit
card information. The banks are also considering the possibility of adding other payment
options, such as enabling payments directly from consumer bank accounts while bypassing card
networks. This initiative follows an earlier effort by credit card networks – Visa, Mastercard,
American Express, and Discover – to roll out a “click-to-pay” digital checkout option that stores
credit card credentials and the cardholder’s billing address.
354
While both online checkout
options offered by issuers and networks remove the need to share fee revenue with a Pay wallet
provider such as Apple, they do not leverage the smartphone for in-store payments – and
therefore cannot be used at a physical point of sale.
There is some reason to believe that digital wallets will create additional competition between
issuers – including on key terms such as APR and rewards. As noted in our 2015 Report, digital
wallets could enable consumers to “use their phones to guide them to the card with the lowest
350
See Kate Fitzgerald, Kroger ending long boycott of Apple Pay, other contactless payments, American Banker
(April 17, 2023), https://www.americanbanker.com/payments/news/krogers-long-boycott-of-contactless-
payments-is-ending.
351
See Discover, Add your Discover® Card to Apple Pay. It only takes a moment with your Discover login.,
available at https://www.discover.com/credit-cards/digital-wallets/applepay/ (last accessed Mar. 16, 2023).
352
See Michael Potuck, Discover announces 5% cash back with Apple Pay for the holiday quarter, 9to5Mac (Aug. 24,
2022), https://9to5mac.com/2022/08/24/discover-apple-pay-cash-back-5-percent/.
353
See AnnaMaria Andriotis, Introducing Paze, Big Banks’ Answer to Apple Pay, Wall St. J. (Mar. 24, 2023),
available at https://www.wsj.com/livecoverage/stock-market-news-today-03-24-2023/card/introducing-paze-big-
banks-answer-to-apple-pay-xUvUJLKPnezPh2ofjQUj. See also Chase, Paze FAQs,
https://www.chase.com/digital/digital-payments/paze-faqs (last accessed July 28, 2023).
354
See Kimberly Palmer, ‘Click to Pay’ Simplifies Online Checkout With Credit Cards, Nerdwallet (Sept. 18, 2020),
https://www.nerdwallet.com/article/credit-cards/click-to-pay; see also Press Release, American Express, Discover,
Mastercard and Visa Implement Click to Pay to Make Online Checkout Simple and Secure (Oct. 22, 2019),
available at https://www.businesswire.com/news/home/20191022005420/en/American-Express-Discover-
Mastercard-and-Visa-Implement-Click-to-Pay-to-Make-Online-Check out-Simple-and-Secure.
169 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
APR or the credit card account that provides the most rewards points for that particular type of
transaction (e.g., triple points for gas on one card, as opposed to double points for groceries on
the other).”
355
Fintech companies now offer mobile and online applications that recommend to a
cardholder which card to use at checkout based on the rewards accrued at the merchant.
356
They
can also make recommendations on new cards that a consumer might apply for and benefit from
based on spending patterns. These applications may make cardholders less likely to stick to one
card in their digital or physical wallets.
7.3.4 Innovations related to credit scoring
As discussed in our 2019 and 2021 Reports, the use of new technologies and additional data
sources in underwriting may enable greater credit access and availability for some borrowers.
357
CFPB researchers have estimated that millions of U.S. adults lack sufficient credit report
information to generate a typical credit bureau score, either because they do not have any
reported credit history or because their credit history is limited or stale.
358
New data sources for underwriting, such as the use of consumer-permissioned data from bank
accounts, could make some segment of this population newly eligible for loans–a further subset
of which may qualify for credit.
359
The same type of data that allows lenders to evaluate the risk
of previously-unscored borrowers could also be used to more accurately predict risk for
borrowers who currently have a traditional credit score,
360
leading to either higher or lower
access and pricing for this latter group.
361
355
2015 Report, supra note 3, at 279.
356
See Kudos, Frequently Asked Questions, https://www.joinkudos.com/ (last accessed Mar. 14, 2023).
357
2019 Report, supra note 3, at 182-186; 2021 Report, supra note 3, at 159-163.
358
Kenneth P. Brevoort, Philipp Grimm, & Michelle Kambara, Data Point: Credit Invisibles, CFPB, at 6 (May 2015),
http://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf.
359
See FinRegLab, The Use of Cash-Flow Data in Underwriting Credit (July 2019), 2, https://finreglab.org/wp-
content/uploads/2019/07/FRL_Research-Report_Final.pdf. See also Peter Rudegeair, JPMorgan, Others Plan to
Issue Credit Cards to People With No Credit Scores, Wall St. J. (May 13, 2021),
https://www.wsj.com/articles/jpmorgan-others-plan-to-issue-credit-cards-to-people-with-no-credit-scores-
11620898206.
360
Alexei Alexandrov, Alyssa Brown, and Samyak Jain, Looking at credit scores only tells part of the story – cash flow
data may tell another part, CFPB Blog (July 26, 2023), https://www.consumerfinance.gov/about-us/blog/credit-
scores-only-tells-part-of-the-story-cashflow-data/.
361
See 82 FR 11183, 11186 (Feb. 21, 2017), https://www.federalregister.gov/documents/2017/02/21/2017-
03361/request-for-information-regarding-use-of-alternative-data-and-modeling-techniques-in-the-credit.
170 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
Innovations in credit scoring, which arise from both credit scoring companies and lenders that
develop their own scores, usually take one of two forms. Some innovations rely on the adoption
and use of additional datasets. These datasets may include consumers’ repayment histories on
non-financial products such as rent, telecommunications and utilities, and, as noted above, data
from bank accounts.
362
Other innovations involve the use of new modeling techniques, including
those characterized as artificial intelligence or machine learning.
363
In light of these developments in credit scoring, some credit card issuers have adopted new
datasets that may expand credit card availability. American Express, which first partnered with
Nova Credit in 2019 to translate international credit reports and scores to U.S. equivalents,
recently expanded the partnership to cover more immigration corridors to the U.S., which may
further expand credit access to a greater number of credit card applicants who are new to the
country.
364
Newer credit card issuers such as Tomo Credit and Petal rely on asset and cash flow
information from applicants’ bank accounts to underwrite consumers that may lack traditional
credit history.
365
More banks are also sharing deposit account data with each other in an effort
to underwrite credit card applicants who lack traditional credit scores but may be able to
demonstrate an ability to repay through their deposit account history with other banks.
366
362
See 82 FR 11183, 11185 (Feb. 21, 2017), https://www.federalregister.gov/documents/2017/02/21/2017-
03361/request-for-information-regarding-use-of-alternative-data-and-modeling-techniques-in-the-credit.
363
See FinRegLab, The Use of Machine Learning for Credit Underwriting (Sept. 2021), 8-12,
https://finreglab.org/wp-content/uploads/2021/09/The-Use-of-ML-for-Credit-Underwriting-Market-and-Data-
Science-Context_09-16-2021.pdf.
364
Press Release, Nova Credit and American Express Expand Partnership to Enable Newcomers from South Korea
and Switzerland to Apply for Personal American Express Cards using Credit Passport (Feb. 8, 2023), available at
https://www.businesswire.com/news/home/20230208005256/en/Nova-Credit-and-American-Express-Expand-
Partnership-to-Enable-Newcomers-from-South-Korea-and-Switzerland-to-Apply-for-Personal-American-Express-
Cards-using-Credit-Passport%C2%AE. See also Press Release, HSBC and Nova Credit Launch Partnership to Offer
Customers Borderless International Credit Checking (Sept. 28, 2022), available at
https://www.businesswire.com/news/home/20220928005259/en/HSBC-and-Nova-Credit-Launch-Partnership-to-
Offer-Customers-Borderless-International-Credit-Checking.
365
See Talib Visram, No Credit? You can still get a credit card from this startup, Fast Company (Feb. 18, 2022),
https://www.fastcompany.com/90722599/no-credit-score-you-can-still-get-a-credit-card-from-this-startup; Sam
Becker, FICO scores are flawed. These lenders say they’ve found a better way to judge your credit, Fast Company
(Feb. 13, 2023), https://www.fastcompany.com/90849536/fico-credit-scores-flawed-alternative-models-financial-
startups
366
See, e.g., David Benoit, Citigroup Joins Industry Effort to Lend to People Without Credit Scores, Wall St. J.
(September 3, 2022), https://www.wsj.com/articles/citigroup-joins-industry-effort-to-lend-to-people-without-
credit-scores-11662174186.
171 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
7.3.5 Credit builder cards
In our 2021 Report, we discussed the emergence of new card products offered by fintech
companies to help consumers, including thin-file or “credit invisible” borrowers, build or repair
credit history.
367
Innovation in this “credit builder card” market continues to appear active and
growing.
368
Newer “credit builder cards” are often promoted as a “safe” or “smart” way to build credit.
369
These products utilize a variety of structures but typically differ from traditional credit-building
credit cards by requiring an active link between a consumer deposit account and the offered
credit.
370
Bank account connections may be utilized to support underwriting without a credit
report as well as the basis for triggering credit account payments in ways that prevent or greatly
reduce the risk of consumer delinquency.
371
Companies also frequently include other features in
their credit builder products that are intended to aid their customers in managing debt. For
example, many do not charge consumers traditional credit card interest or fees and instead
367
2021 Report, supra note 3, at 159 to 163.
368
For example, in addition to various financial technology companies offering credit builder cards directly to
consumers, one company recently launched a “banking-as-a-service” product for deploying secured credit builder
cards. See Bond, Launch a Credit Builder Card, Fast, https://www.bond.tech/credit-builder-card (last accessed July
18, 2023). Incumbent card issuers also appear to be responding with new products geared to consumers seeking to
establish credit. See Chase, Press Release, Chase Freedom Launches New Credit Card, Freedom Rise,
https://media.chase.com/news/chase-freedom-ri se -launches-new-card (last accessed July 18, 2023).
369
See, e.g., Chime, https://www.chime.com/credit-builder/ (“Start building credit safely”) (last accessed July 18,
2023); Tomo, https://tomocredit.com/ (“Build your credit the smart way.”) (last accessed July 18, 2023).
370
“Neobank” companies require consumers to open a deposit account to access their credit builder card offering.
See, e.g., Varo, Varo Believe Credit-Builder Card, https://www.varomoney.com/credit-builder/ (last accessed July
18, 2023). Others use consumer-permissioned data aggregators to link to the consumer’s primary bank account from
another provider. See, e.g., Extra, How does the Extra Card Work?, https://extra.app/#howextraworks (last
accessed July 18, 2023); It is also noteworthy that not all “credit builder cards” are credit cards. While some are
issued as secured credit cards, such as the Chime Credit Builder and Varo Believe cards, others are issued as debit
cards for transactional use combined with unsecured lines of credit for credit reporting purposes. See, e.g., Extra,
How does the Extra Card Work?, https://extra.app/#howextraworks (last accessed July 18, 2023).
371
For example, some companies combine unsecured lines of credit with issuing debit card-like features by
automatically paying down card balances on the next business day or every week. See, e.g., StellarFi, How does it
work?, https://support.stellarfi.com/hc/en-us/articles/4537829672603-How-does-it-work- (last accessed July 18,
2023) (next business day); TomoCredit, Frequently Asked Questions, https://tomocredit.com/faq (last accessed
July 18, 2023) (weekly). Others require a security deposit, but permit it to be utilized for monthly payments, with
corresponding reductions in spending limits. See, e.g., Chime, How it works, https://www.chime.com/credit-
builder/ (last accessed July 18, 2023).
172 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
generate revenue through interchange fees
372
or fixed monthly or annual subscription costs.
373
They also tend to actively promote credit monitoring and financial management tools.
374
These features provide an attractive mechanism for millions of consumers to enter the credit
reporting ecosystem, but these modern credit builder cards differ from other types of credit in
fundamental ways. One potential concern is that repayment patterns in credit builder cards may
not be as indicative of future likelihood to repay as traditional products. Scoring models may
adjust to this difference over time if credit builder cards become more widely used.
375
Relatedly,
as companies compete on credit building features, it will be important for them to accurately
convey the nuances of these products, such as the potential score improvement benefits and the
potential costs of “no interest and fees” pricing structures.
7.4 Credit card competitors
As noted above, our reports have covered two types of innovation affecting the credit card
market: those involving traditional credit cards and those arising from adjacent or overlapping
consumer financial markets. Many of the innovations covered in previous reports were of the
latter kind. In light of this report’s focus on competition, we summarize several of these
products and services to illustrate how competition and innovation from the broader consumer
financial marketplace may prompt changes in traditional products.
Beginning with our 2015 Report, we noted the emergence of new competitors in the consumer
lending market that offered alternatives to traditional credit card financing. One such form of
competition involved installment loans offered to consumers at the point of sale. The CFPB has
more recently studied Buy Now, Pay Later (BNPL) products as an additional mechanism for
financing purchases at the point of sale.
376
Other Reports also covered unsecured personal loans
from fintech lenders that were marketed as a means of paying off revolving credit card balances
or financing large purchases. And more recently, some banks have been exploring the possibility
372
See, e.g., TomoCredit, Frequently Asked Questions, https://tomocredit.com/faq (last accessed July 18, 2023).
373
See, e.g., StellarFi, Pricing, https://stellarfi.com/pricing (last accessed July 18, 2023). Companies that offer
banking services in addition to credit builder cards likely also rely on broader relationship revenue in lieu of card-
based revenue.
374
See, e.g., Credit Sesame, https://www.creditsesame.com/ (last accessed July 18, 2023); StellarFi,
https://stellarfi.com/ (last accessed July 18, 2023).
375
See, e.g., Miriam Cross, Will new credit building products work as promised?, American Bank er (August 22,
2021) (citing Alex Johnson).
376
See BNPL Report, supra note 212.
173 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
of bypassing card networks entirely by facilitating payments to merchants directly from
consumer bank accounts.
7.4.1 Point-of-sale loans and BNPL
Fixed-interest installment loans offered at the point of sale (POS) provide an alternative to
traditional credit card financing.
377
These loans are presented to consumers at a partner
merchant’s online or physical POS, typically through a branded “pay with” button as a payment
option during checkout. These POS loans are generally unsecured, closed-end installment loans,
with loan proceeds used to pay the merchant directly once the consumer is approved through a
real-time underwriting process. In contrast with the BNPL products discussed below, these
loans are usually intended for large, infrequent purchases (e.g., furniture and high-priced
exercise equipment), carry interest, and can have terms of up to three or four years. Down
payments are typically not required.
Distinguishable from conventional POS loans are BNPL products, which are also discussed in
Section 6.2 above. BNPL generally refers to a “pay-in-four” product, i.e., a four-installment, no-
interest consumer loan made at the POS, typically with a down payment of 25 percent and the
remaining three installments due in two-week intervals.
378
From 2019 to 2021, the number of
BNPL products originated in the U.S. by five lenders surveyed by the CFPB grew by 970 percent,
from 16.8 to 180 million, while the dollar volume of those originations grew by 1,092 percent,
from $2 billion to $24.2 billion.
379
Both POS loans and BNPL products target consumers who might otherwise choose to add
certain purchases to their revolving credit card balance. Other similarities between traditional
credit cards, non-card POS loans, and BNPL products include: a product that merges payments
and credit, a business model that includes transaction fees charged to merchants, and a focus on
retail purchases. Some lenders offering BNPL and POS loans also now have mobile apps that
allow consumers to purchase goods from virtually any retailer – expanding their use case
beyond just those retailers that have agreed to present the lender as an option at checkout.
In a possible reaction to new POS financing options, including growth in BNPL, numerous
traditional credit card issuers have sought to offer their own “fixed-payment” features for
377
See Diana Goldshtein and Udai Kaura, US lending at point of sale: The next frontier of growth, McKinsey &
Company (Nov. 4, 2019), https://www.mckinsey.com/industries/financial-services/our-insights/banking-
matters/us-lending-at-point-of-sale-the-next-frontier-of-growth. See also 2019 Report, supra note 3, at 176 to 177.
378
CFPB BNPL Report, supra note 212, at 6.
379
Id.
174 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
individual purchases made on credit cards. As discussed in Section 6.2 above, these features
allow customers to convert larger purchases made on their cards into closed-end installment
loans, similar to those offered by POS lenders. This may offer consumers greater flexibility and
control in paying down different purchases at different costs and speeds, along with more
certainty regarding the total cost of specific purchases. At the same time, since these installment
plans are offered in connection with credit card accounts, certain provisions from the CARD Act
and Regulation Z – particularly around limits to repricing -- may present barriers to issuers
seeking to offer these optional plans.
7.4.2 Fintech personal loans
Another product that poses competition to traditional issuers includes personal loans offered by
fintech or other online lenders. While unsecured personal loans are hardly new, their origination
through online or fintech channels has grown substantially over time. Between 2017 and 2022,
fintech lenders nearly doubled their share of personal loan originations to almost 40 percent.
380
This growth has led to an increase in competition for revolving credit card balances. Personal
lenders advertise their products as a way to consolidate credit card debt at interest rates lower
than those applied to revolving balances. These lenders also target borrowers seeking to finance
large expenditures that might otherwise be added to credit card balances. As a result, increasing
personal loan volume tends to reduce interest and fee revenue – including fees from balance
transfers – that would have been earned by traditional card issuers over time.
As online lenders grew in market share, traditional credit card issuers invested more heavily in
new products or features that might appeal to customers seeking fintech personal loans. Today,
several major credit card issuers have branded personal loan products, including offerings from
American Express,
381
Discover,
382
U.S. Bank,
383
and Wells Fargo.
384
Like the products offered by
380
Eldar Beisatov, The Role of Fintech in Unsecured Consumer Lending to Low- and Moderate-Income Individuals,
2, available at
https://www.newyorkfed.org/medialibrary/media/newsevents/events/regional_outreach/2022/092922/2022-09-
29-eldar-beiseitov-fintech-personal -loans-ny-fed.
381
American Express, Get the funds you need with American Express Personal Loans,
https://www.americanexpress.com/us/loans/personal-loans/ last accessed Mar. 14, 2023).
382
Discover, Discover Personal Loans, https://www.discover.com/personal-loans/ (last accessed Mar. 14, 2023).
383
U.S. Bank, Personal Loan, https://www.usbank.com/loans-credit-lines/personal-loans-and-lines-of-
credit/personal-loan.html (last accessed Mar. 14, 2023).
384
Wells Fargo, Personal Loan Rates, https://www.wellsfargo.com/personal-loans/rates/ (last accessed Mar. 14,
2023).
175 CONSUMER FINANCIAL PROTECTION BUREAU – CONSUMER CREDIT CARD MARKET REPORT
fintech lenders, these personal loans are advertised as a way to consolidate credit card debt,
fund home improvement projects, or pay for large expenditures like weddings and travel.
7.4.3 “Pay-by-bank”
Peer-to-peer mobile applications such as PayPal, Venmo, and Zelle already provide bank
accountholders the ability to pay each other nearly instantly. Because peer-to-peer payments
often use the Automated Clearance House (ACH) bank payment network and other non-credit
card payment networks,
385
parties to peer-to-peer transactions typically do not bear the cost of
interchange fees that come with credit card payments. Despite the lower cost of these peer-to-
peer payments, however, their use for retail payments to merchants remains limited.
Recent reports in the media indicate that some banks may be seeking ways to facilitate more
retail payments to merchants directly from customer bank accounts, without using debit or
credit card payment rails.
386
These “pay-by-bank” initiatives may be boosted by the Federal
Reserve’s launch of FedNow, a bank-to-bank payments service that will be faster than the ACH
network.
387
To the extent pay-by-bank captures a share of retail payments, credit card issuers
will be deprived of corresponding interchange fees and revolving balances. However, while a
pay-by-bank service may lower costs for some parties, including merchants paying less in
processing fees, customers may lose out on rewards and certain fraud protections. The CFPB
will closely monitor new retail payment mechanisms for the benefits and risks they present to
consumers.
385
See Michael Moser, How The Clearing House is paving Zelle’s path to the point of sale, American Banker (Sept.
25, 2019), https://www.americanbanker.com/payments/news/how-the-clearing-house-is-paving-zelles-p ath-to-
the-point-of-sale.
386
See Joshua Franklin, How JPMorgan’s plan to kill credit cards split the bank, Financial Times (Sept. 23, 2022),
https://www.ft.com/content/f6d8d454-2413-4f2b-945d-825d0a68730b.
387
See John Adams, How do real-time payments work?, American Banker (Feb. 17, 2023),
https://www.americanbanker.com/payments/news/how-do-real-time-payme nts-work. See also Board of Governors
of the Federal Reserve System, Federal Reserve announces July launch for the FedNow Service (Mar. 15, 2023),
https://www.federalreserve.gov/newsevents/pressreleases/other20230315a.htm.
