On Wednesday, the Consumer Financial Protection Bureau (CFPB) announced significant measures to protect consumers from deceptive credit card practices and help them save money on interest and fees.

These efforts include issuing a circular to law enforcement agencies, publishing new research on retail credit cards, and launching a comparison tool to aid consumers in navigating the credit card market.

Investors will closely watch credit card companies, including Visa Inc (NYSE:V), Mastercard Inc (NYSE:MA), American Express Co (NYSE:AXP), Affirm Holdings, Inc (NASDAQ:AFRM), Corpay, Inc (NYSE:CPAY), Global Payments Inc (NYSE:GPN) and Shift4 Payments, Inc (NYSE:FOUR).

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According to the CFPB, some credit card issuers may be engaging in illegal practices such as devaluing rewards points or miles, making it difficult for consumers to redeem promised benefits.

The agency highlighted that companies could face penalties if they fail to deliver advertised rewards, mislead users with hidden terms, or revoke rewards through unclear policies.

The circular aims to deter companies from engaging in bait-and-switch tactics and to encourage fair competition within the credit card industry.

As part of its ongoing research, the CFPB discovered that retail credit cards often charge higher interest rates than general-purpose cards. According to the study, more than 90% of retail cards carry a maximum annual percentage rate (APR) above 30%, compared to just 38% for non-retail cards.

Retail cards, frequently promoted during peak shopping seasons, also account for a disproportionate share of late fees, highlighting potential consumer risks.

The CFPB unveiled its "Explore Credit Cards" tool to address these concerns, designed to provide unbiased information about over 500 credit cards. Unlike traditional comparison sites, this platform enables users to compare cards based on interest rates, fees, and rewards without pay-to-play promotions.

Earlier this year, the CFPB revealed that larger credit card issuers charge significantly higher interest rates than smaller banks and credit unions. By making average interest rate data publicly accessible, the CFPB aims to empower consumers to make informed decisions and find the best rates tailored to their needs.

The CFPB plans to continue monitoring the credit card market and welcomes voluntary data contributions from additional issuers to enhance its comparison tool further.

In October, the CFPB ordered Apple Inc (NASDAQ:AAPL) and Goldman Sachs Group Inc (NYSE:GS) to pay $89 million in fines for deceptive practices regarding the Apple Card.

In December, Morgan Stanley (NYSE:MS) Wealth Management agreed to pay a $15 million fine after the SEC found the firm failed to prevent financial advisors from using client funds to cover personal credit card bills. The SEC investigation uncovered gaps in supervisory practices between 2015 and 2022, allowing unauthorized Automated Clearing House (ACH) transfers to advisors' accounts.

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