Banks hit credit card users with higher rates in response to regulation that may never arrive

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Banks that issue credit cards used by millions of consumers raised interest rates and introduced new fees over the past year in response to an impending regulation that most experts now believe will never take effect.

Synchrony and Bread Financial, which specialize in issuing branded cards for companies including Verizon and JCPenney, have said that the moves were necessary after the Consumer Financial Protection Bureau announced a rule slashing what the industry can charge in late fees.

«They're the two banks that have been most vocal about it, because they were going to be the most impacted by it,» said Sanjay Sakhrani, a KBW analyst who covers the card industry. «The consensus now, however, is that the rule isn't going to happen.»

The effect is that proposed regulation intended to save consumers money has instead resulted in higher costs for some.

On Nov. 22, CNBC reported that rates on a wide swath of retail cards have jumped in the past year, reaching as high as 35.99%. Synchrony and Bread raised the annual percentage rates, or APRs, on their portfolios by an average of 3 to 5 percentage points, according to Sakhrani.

On top of that, customers of the two banks have been given notice of new monthly fees of between $1.99 and $2.99 for receiving paper statements.

Bread, which issues cards for retailers including Big Lots and Victoria's Secret, began boosting the rate on some of its cards in late 2023 «in anticipation» of the CFPB rule, Bread CFO Perry Beberman told analysts in October.

«We've implemented a number of changes that are in market, including the APR increases and paper statement fees,» Beberman said at the time.

The CFPB says the credit card industry profits off borrowers with low credit