While reports are showing the consumer debt is down and the average card holder carries a smaller balance than in previous years, there is evidence based on information collected by Consumer Reports consumers are still not feeling the love for their credit card providers even with the changes brought on by the CARD Act.
An estimated 45 percent of polled consumers say they are satisfied with how they’ve been treated by their credit card company but a larger number are still sic and tired of the card companies ability to play with the loopholes.
There has been certain success following the CARD Act. Many card holders have able to eliminate or at least reduce the amount of their total credit card balance. This is due in part to the card companies reducing fees and consumer paying larger portions towards their balance due. It is also due to the fact that many consumers have stopped relying so much on spending on credit and have been working towards better overall money management.
Not So Good Things
While the CARD Act was supposed to regulate the amount of fees, time limits, and changes to account for credit card companies across the board, a larger percentage of people surveyed still say they have big frustrations about their credit card companies. Many are still finding ways around the CARD Act to make a profit. Annual fees are becoming higher while credit card limits are being lowered. Credit card companies are also raising the amount of the minimum monthly payments on many consumer accounts.
The biggest consumer complaint is that credit card issuers are still making changes to credit card agreements without proper notice or even any notice at all. As consumers are trying to stay on top of their credit accounts while understanding the finer points of the CARD Act any subsequent changes can be very confusing and frustrating to the card holder.
The Balance Stats
Although the average balance on consumer credit cards stands at $3,793 (down from $4,893 last year), consumers still have some work to do to manage their credit cards more effectively. Consolidation is a consideration to make if you have several cards you feel tempted by. A balance transfer credit card is an option that can allow consumers to pay down balances faster with less fees and interest charges.
If you opt to consolidate your credit card balances to a single card, make certain you read the fine print on the new card agreement. There are fees involved and limitations place on how much you can transfer onto a new card. If your existing balances are above your new credit limit, a balance transfer will not be your best financial move. Instead, dedicate more cash towards existing balances to pay down debts faster.
What to Know About the Credit Card Act
Whether you opt to go with a new balance transfer credit card or continue to pay off your old credit card debts, it is essential for you to understand the finer points of the CARD Act so you’ll know if you are being treated fairly or not.
Here is a basic overview of what you need to know:
There are no changes in terms or rates allowed in the first year of a new card, except:
- If payment is more than 60 days late
- When a promotional rate expires
- If the variable rate is adjustable
There will be no rate hikes on existing balances
- Interest rate increases generally apply only to new transactions
- 45 days’ advance notice is required of any significant changes
- Right to decline the change, close card and pay off balance over time
Consumers have been given more time to plan for and make payments
- Billing due date remains the same each month
- Bills must be sent 21 days in advance
- Payments received by 5 p.m. must be credited that day
Consumers have the choice to ‘opt in’ and control and choice on over-limit fees
- Cardholder can control and avoid fees
- Over-limit fees cannot be charged unless customer “opts in”
Consumer credit card statements and billing will now be more detailed and informative and includes:
- Length of time to pay off your current balance if you make only minimum payments.
- How to pay off your current balance in three years.
- What will happen if your payment is late