Credit card rewards are among the many services credit unions offer to meet members’ needs, Apple Federal Credit Union President/CEO Andy Grimm highlighted during a joint CFPB/Department of Transportation hearing Thursday. Grimm said Apple Federal Credit Union is dedicated to advancing financial education and he considers his credit union “to have something for everyone” when it comes to cards, including rewards programs and low-rate cards.
“The credit card business is one of the most competitive lines of business we’re in. It’s fierce, fierce competition,” he said, saying it’s easier for Apple Federal Credit Union to compete with the larger issuers on better rates as opposed to rewards, and noting credit cards make up approximately 5% of Apple’s portfolio.
“From a financial perspective, we do have a cap on our rates, so if the underlying rates in the economy are going up, which they have, or if there’s a recession or less ability to for people to pay as easily due to economic conditions, it does challenge the vibrancy of our programs,” he said.
Grimm said Apple has fewer income streams than the big banks, so non-interest income is extremely important.
“The trend there is not good,” he said. “Just to give a quick example, in 2023 interchange income was less than 2022 despite having more transactions.”
CFPB Director Rohit Chopra said during the event credit unions “are an important part of the credit card market,” especially due to the competition they provide to the larger issuers. A report issued by the bureau earlier this year showed credit unions offer lower interest rates than the largest credit card companies.
Grimm is a member of the bureau’s Credit Union Advisory Council, which advises the bureau on policy from the credit union perspective.
The CFPB released a report Thursday highlighting several concerns based on consumer complaints regarding credit card reward programs.
Another member of America’s Credit Unions also testified Thursday at a Senate Banking Committee hearing on fees in financial services.
America’s Credit Unions is active on several policy issues related to fees and credit cards to protect credit unions’ best interests, including supporting efforts to overturn the bureau’s credit card late fee final rule. The organization will continue to defend credit unions against regulatory overreach and fight for an environment that allows the industry to thrive.
