April 25, 2024 — Press Release
BOSTON – In response to the announcement by Synchrony Bank that new rules lowering late fees are driving it to raise rates on its credit cards, consumer advocates questioned what is driving the higher rates and defended the new late fee rule by the Consumer Financial Protection Bureau. Synchrony issues store-branded credit cards through retailers such as Lowes, TJ Maxx, and Sam’s Club. Synchrony is also likely the largest issuer of medical credit cards with its CareCredit card.
Advocates noted that Synchrony appears to be in good financial health, with its stock jumping 5% on Wednesday and announcing more stock buybacks. “Does Synchrony really need to raise rates to 34.99%, or is this another example of corporations excessively increasing prices because they can get away with it?,” asked Chi Chi Wu, senior attorney at the National Consumer Law Center.
But even if the changes are due to the coming requirement to lower late fees, generally to $8, advocates said that the rules will encourage up-front price transparency instead of back-end junk fees aimed at struggling families.
“Synchrony issues some of the most problematic cards in the marketplace, with deferred interest traps that wallop struggling consumers with large amounts of retroactive interest and high-cost CareCredit cards pushed in healthcare settings,” said April Kuehnhoff, senior attorney at the National Consumer Law Center. “Compared to other credit card lenders, late fees make up a greater portion of Synchrony’s bottom line, which should raise eyebrows.”
“When consumers can easily see the up-front costs of these high-APR credit cards instead of hidden back-end junk fees, they will think twice before taking out these cards,” said Lauren Saunders, associate director at the National Consumer Law Center.
