Letter to CFPB Regarding Request for Information Regarding Credit Card Markets

February 19, 2013

Consumer Financial Protection Bureau

Monica Jackson

Office of the Executive Secretary

1500 Pennsylvania Ave. NW

Washington, DC 20220

RE:      CFPB–2012–0048; Request for Information Regarding Credit Card Market

Dear Ms. Jackson:

On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I am writing to you regarding the Consumer Financial Protection Bureau’s (CFPB) Request for Information Regarding Credit Card Market. The CARD Act changed the requirements applicable to credit card pricing in a number of significant respects and have required credit unions to change the way the approach the credit card market. While NAFCU generally supported the intent behind the CARD Act, some of the broad changes targeting bad actors and predatory practices have come at a cost to credit unions and their members.

The CARD Act has impacted credit unions in a significant way by increasing expenses and adding increased risk to their portfolios. In many cases those costs are not counterbalanced by significant benefits for credit union members. One example is that some credit unions have not been able to develop an effective process to increase rates when applicants request a higher credit limit but their risk score has since deteriorated. In the example, credit unions have to accept risk without the ability to do proper risk-based pricing.

The CFPB has asked to what extent card issuers are engaged in risk-based pricing. There is no single answer that applies to all credit unions. Some credit unions are fully engaged in risk-based pricing for credit cards and plan to be so for years to come, while others are either minimally engaged or not at all. NAFCU continues to advocate for the independence ability of credit unions to use their best judgment based on what is best for their field of membership and business model.

Finally, the CFPB has asked to what extent has the CARD Act spurred or hampered product innovation in the credit card market. It takes a great deal of resources to deal with the deluge of new regulations and innovation has suffered as a consequence. Innovation is discouraged especially in products such as credit cards that require calculated risks that can become very costly.

NAFCU appreciates the opportunity to provide feedback.  If you have any questions or concerns, please feel free to contact me at (703) 842-2212 or via email at


PJ Hoffman

Regulatory Affairs Counsel

National Association of Federal Credit Unions

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