Home Add to Favorite Contact Submit  
           29 March, 2024


    
Category:  Press » Finances

 

Pew Report Finds Credit Cards More Transparent, Yet Problems Remain

Popularity:
         Views: 1504
2010-07-22 05:48:11     
The Pew Charitable Trusts

Most of the practices deemed "unfair" or "deceptive" by the Federal Reserve have disappeared from new credit card offers since federal passage of the Credit CARD Act last year, according to a new report by the Pew Health Group's Safe Credit Cards Project. Yet new trends have emerged that could cost cardholders significantly.

The report finds that issuers have eliminated practices such as "hair trigger" penalty rate increases (disproportionate charges for minor account violations), unfair payment allocation, and raising interest rates on existing balances. However, Pew's research also highlights a sharp rise in cash advance fees, continued widespread use of other penalty interest rates and an emerging trend of credit card companies failing to disclose penalty interest rates in their online terms and conditions.

"While it's been less than a year since passage of the Credit CARD Act, the new law appears to be working for millions of Americans who have credit cards," said Shelley A. Hearne, managing director of the Pew Health Group. "The elimination of most of the 'unfair' or 'deceptive' practices of the credit industry since we last surveyed the marketplace marks a major milestone in the move to make credit cards safer, transparent and more fair for consumers. Most of the news is good, but we are seeing the rise of new harmful behavior."

The study, Two Steps Forward: After the Credit CARD Act, Cards Are Safer and More Transparent—But Challenges Remain, is the latest in a series of reports from the Pew Safe Credit Cards Project that has examined all consumer credit cards offered online by the nation's 12 largest banks and 12 largest credit unions. Together these institutions control more than 90 percent of the nation's outstanding credit card debt. For this latest report, which measures how the industry has changed since the passage of the Credit CARD Act, Pew gathered data in March 2010 on nearly 450 cards. Full details, including previous research, can be found at www.pewtrusts.org/creditcards.

Key findings show:

Many of the most troublesome practices of the credit card industry have been eliminated. A credit card issuer can no longer unilaterally decide to raise interest rates on existing balances. Likewise, practices including "hair trigger" penalty rate increases, unfair payment allocation, and overlimit fees without prior consent are a thing of the past. Earlier Pew research found that before the implementation of the law, 100 percent of the credit cards surveyed included at least one of these practices.
Beyond the requirements of the new law, there are new practices that benefit consumers. Less than 25 percent of all cards examined had an overlimit fee, which is down from more than 80 percent of cards in July 2009. Additionally, mandatory arbitration clauses, which can limit a consumer's right to settle disputes in court, are now found in 10 percent of cards compared to 68 percent in July 2009.
Predictions that legislation would spawn the growth of new fees have yet to materialize. There was minimal change in the number of cards that include an annual fee (down 1 percentage point from July 2009 to March 2010). During that period, the median size of these fees increased from $50 to $59 for banks and from $15 to $25 for credit unions.
Some disclosures stopped including the size of penalty interest rates even as issuers reserved the right to impose them. At least 94 percent of bank cards and 46 percent of credit union cards came with interest rates that could go up as a penalty for late payments or other violations. But nearly half these warnings failed to inform the consumer of the actual penalty interest rate or how high it could climb.

"Although we applaud changes by the card industry to create a fairer and more transparent marketplace, our research shows that some challenges remain," said Nick Bourke, director of Pew's Safe Credit Cards Project and report co-author. "For the first time, we have seen credit card disclosures warning consumers that interest rates could go up as a penalty for certain actions, but not stating how high those rates could go. Federal regulators should pay attention to this problematic new trend. When issuers withhold vital pricing information, it leaves cardholders in the dark and puts their financial security at risk, which is why federal regulations have long required issuers to disclose their rates and fees up front."

Two Steps Forward includes a number of policy recommendations to address new challenges, including:

Federal bank regulators should enforce existing regulations that require companies to disclose full and reliable credit card penalty rate information.
The Federal Reserve should prohibit issuers from charging penalty interest rates that are higher than initially disclosed when the consumer opened the card account.

The report also shows that surcharge fees for cash advances rose sharply between July 2009 and March 2010. Bank cash advance and balance transfer fees increased on average by one-third during this period, from 3 percent of each transaction to 4 percent. Credit union cash advance fees went up by one quarter, from 2 percent to 2.5 percent.

Other pricing data is also included in the report, showing recent increases in a variety of credit card interest rates and fees.

About the Pew Health Group

The Pew Health Group is the health and consumer-product safety arm of The Pew Charitable Trusts, a nonprofit organization that applies a rigorous, analytical approach to improve public policy, inform the public and stimulate civic life. www.pewtrusts.org/creditcards

Specialized in: Pew Charitable Trusts - Pew Charitable Trust - Global Warming Research - Non Profit Grant - Educational Research - Public Policy - Non Profit Organizations - Charitable Organizations - Community Service - Religion In America
URL: http://www.pewtrusts.org
Print press release      Bookmark this page
Related Press releases 
Investment And Wealth Creation (Popularity: ): This is because wealth building takes years of strategic financial planning as well as sustained investment and wealth creation efforts. At FBNQuest, we’re committed to helping our clients build and manage generational wealth through our excellent wealth advisory and management solutions. In this article, we will highlight the need for wealth planning and strategies you can leverage in wealth creation.Investment and Wealth Creation Wealth creation is a process of growing your ...
Ethical mutual funds (Popularity: ): FBNQuest Launches the FBN Halal Fund for Ethical Investing In a bid to provide investors with investment options that improve financial inclusion and align with ethical beliefs, FBNQuest Asset Management, a subsidiary of FBN Holdings recently launched the FBN Halal Fund.Regulated by the Securities and Exchange Commission (SEC), the FBN Halal Fund is an open-ended mutual fund designed to meet the needs of investors seeking long-term income generation, as it offers ...
Goldsmith & Company: Leading the Way in Financial Services with Expert Chartered Accountants in North London (Popularity: ): London UK, (press.abc-directory ) 11 May 2023 - Goldsmith & Company, a premier accounting firm, is proud to offer exceptional financial services with their team of expert chartered accountants in North London. By delivering tailored solutions to help businesses and individuals navigate the complexities of financial management, Goldsmith & Company has become a trusted partner for clients seeking expert advice and support.In today's ever-changing financial landscape, it is crucial for ...
Atlas Insurance Agency Discusses Hawaii Commercial Property Insurance (Popularity: ): Honolulu, Hawaii ( press.abc-directory.com ) October 10, 2022 - Atlas Insurance Agency, a Hawaii property and casualty insurance agency, has recently delivered an article discussing the basics of Hawaii commercial property insurance. This new informational resource was written by the insurance agents at Atlas to provide business owners in Hawaii with information about business property coverage that is unique to their state. The Atlas team is made up of experienced ...
Georgia Business Insurance Agency Releases a New Educational Resource on Commercial Auto Insurance (Popularity: ): Alpharetta, Georgia ( press.abc-directory.com ) August 4, 2021 - Southern States Insurance has recently released a new educational resource that discusses commercial auto insurance and the details of coverage. The new blog is guided by the Georgia commercial auto insurance experts at Southern States Insurance who have extensive experience helping those in the commercial auto industry get thorough and comprehensive coverage.Southern States Insurance offers readers some valuable information that helps ...


Related Business 
Free Credit Report No Fee (Popularity: ): Free Credit Report No Fee will provide you the option to subscribing to a plan that works as a watchdog over your credits. If you want to understand what your credit report is, how credit report can aid you and where to get credit report, then look no further. Your financial report is an important piece of details which aids you to know your financial fitness through the eyes of ...
Free Annual Credit Report (Popularity: ): The free annual credit report provides how to get your Free Annual Credit Report, Instant Credit Report, free auto score, credit report tracking, Credit Score Tracking easily when you are seeking a loan or credit card. It also inform you to pay your bills in time and the available credit you use actually. Also maintain your credit use less which helps to get possible credit scores.
Free Annual Credit Report (Popularity: ): The free annual credit report provides how to get your Free Annual Credit Report,Instant Credit Report,free auto score,credit report tracking,Credit Score Tracking easily when you are seeking a loan or credit card.It also inform you to pay your bills in time and the available credit you use actually.Also maintain your credit use less which helps to get possible credit scores.
Credit Cards Loans (Popularity: ): Credit cards - Nowadays, credit cards are becoming an essential tool for everyone, and they use it in their daily transactions. Credit card companies are coming up with various kinds of cards that can serve businessperson, travelers, and any other person.
Which Credit Report (Popularity: ): Whichcreditreport.co.uk explains everything you need to know about your credit report, including what information you'll find on it, how long entries stay there and how to order your credit report for free. You'll also find out what your credit score is, how to improve your credit score, what identity fraud is, and how to protect yourself from identity theft.
Your Credit Question (Popularity: ): Online report about your credit score and latest news about bank credit you can find on our site. Credit report and how not to get a bad credit.This easy to follow credit repair system was developed by an average guy who fixed his credit, his name is Chris Brisson. Like alot of People around the world Chris had crushing debt and poor credit scores. Chris knew he had to get ...
Credit Card Offers Online (Popularity: ): TopCreditCards.com brings you several Credit Cards, Credit Programs, & Credit Services that you can choose according to your requirements & finances. In this new age where Credit Card rules, it becomes an obligation to get the Best Credit Card Offers. TopCreditCards.com complies with customers in pursuit of finding Credit Cards, Prepaid & Debit Cards along with various programs on Credit Reports & Credit Scores.
Find The Best Credit Card (Popularity: ): A site with information about some of the best credit cards for the norwegian market. Here you can compare different credit cards and determine what is best for your personal finances. There are many different types of credit cards, many are free to own, and you only pay for any interest if the bill is paid by the deadline.
Get Unsecured Credit Cards (Popularity: ): We design cards for credit for people with Bad Credit. We have a complete solution of credit for people with bad credit. Find your best credit cards offers with guaranteed credit cards for people with bad credit.
Best Prepaid Cards (Popularity: ): Prepaid debit cards are alternatives to regular credit cards for people with limited access to banks or credit history underdeveloped. They look exactly like regular credit cards because they are MasterCard and Visa cards (sometimes American Express and Discover as well).