Credit cards from smaller banks charge much lower interest rates, CFPB says. But is it the right choice for you?

Using a credit card issued by a small bank or credit union could cost you $400 to $500 less each year than a card from a big national bank.  That’s a finding from a new survey by the Consumer Financial Protection Bureau. Credit cards issued by small institutions such as community banks and credit unions have significantly lower annual percentage rates than the ones issued by the largest institutions, the CFPB found. 

During the first half of 2023, small banks and credit unions tended to offer cheaper interest rates than the largest 25 credit card issuers across all credit tiers. For people with a “very good” or “great” credit score of 720 and up, the median purchase APR offered by large institutions was 22.99%, while the median purchase APR offered by smaller institutions was 15.24%. For someone with a good credit score in the range of 620 to 719, the median APR difference was 28.20% versus 18.15%.  The average cardholder carried $5,288 in credit-card debt at the end of 2022, according to a 2023 CFPB report. That means that an average cardholder could save up to $400 to $500 a year due to the difference in APRs from small vs. larger issuers.  This could be a piece of helpful information for an average American today — the cost of credit cards has never been more expensive, according to the 2023 CFPB report, and credit-card delinquencies are rising, surpassing pre-pandemic levels. The F …

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