Credit Card Confusion
The Credit Card Accountability, Responsibility and Disclosure Act was passed to help give consumers more clarity about the costs of using credit cards and was intended to hold card companies accountable for stricter regulations and disclosures. Has it done its job or do you still feel confused?
Here are some discoveries since its inception:
- Continued Confusion - based on JD Power's recent credit card satisfaction survey, only 47% said they completely understand the terms of their cards. Many are still confused over the interest rate being charged (73%) and some over the confusion on late fees (31%).
- Satisfaction Up? - the same survey shows satisfaction is up (14 points) with consumers being much happier today than before the law was passed. Is this because of the law or is it because of the improving financial and economic condition we are now in versus 2010 when this law was passed?
- Eliminating Fees + Penalty Rates - is this a trend or something all card companies intend on doing? Discover has now offered a new card which does not charge a late fee on the first missed payment and does not subject someone who misses a payment to a higher "penalty" rate. Will more card companies follow this same approach?
- Better Education - many card companies are doing a better job educating consumers about their card agreements through things such as interactive online guides as well as additional booklets and mailers providing additional card information and disclosures.
- Transparency - another key component of the law was transparency. You can now see on your statements the estimated amount of time it will take to pay off your balance in full if you only pay the minimum versus other payment amounts.
- Improved Rewards Programs - many card companies have revamped their rewards programs and are making it easier to opt-in to various parts of the program including changing airlines carriers. Using mobile smart phone devices to opt-in or out of certain things as well as other social media websites like Facebook have helped consumers take better advantage of these offerings.
The jury is still out whether or not the new credit card law will help consumers become better at managing credit card debt. I don't believe it is the government's job to do this but rather each individual needs enough self-discipline and restraint to learn how to properly manage their own situation. Credit cards serve a purpose for those who rightfully understand how to use them!
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If so - please email me at carleton@mchenrycapital.com or call me at 888-968-9815 and I would be happy to tell you more and/or discuss your own situation in more detail.
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