A new report from the Center for Responsible Lending shows that the high credit card fees many consumers face are also bad for business. Joshua Frank, author of the report, states that regulating the industry makes the system more stable. According to the report, credit card issuers that obscured pricing faced double the charge-offs during the recession when compared with companies that did not use such tactics. When consumers are tricked and do not have a firm understanding of the fees and terms, they are much more likely to default.
Franks report looked at 23 marketing and pricing practices from the top 100 card issuers from 2006 to 2010. Many of the more dubious practices have ended thanks to the CARD Act implemented in 2010. Nevertheless, there are still some practices that negatively affect consumers. One is the ability of card issuers to raise the interest rate on a consumers future purchases at any point. Card issuers do not even have to give a reason for the change.