Analysts says they are shocked by the Pew Charitable Trust showing that some of the most harmful credit card practices continue, even though the CARD Act has passed and the provisions are less than four months away from implementation.
Well I am not shocked or surprised. Every time Congress says it will reform something, hold on to your billfold.
From www.lowcards.com
New Study Shows Harmful Credit Card Practices Continue
A new study confirmed what cardholders and Congress already know: credit card issuers are in no hurry to implement the regulations of the CARD Act.
Instead, some of the most harmful practices are even more widespread.
Today, the Pew Charitable Trust released “Still Waiting: ‘Unfair or Deceptive’ Credit Card Practices Continue as Americans Wait for New Reforms to Take Effect.” The study examined almost 400 credit cards advertised by banks and credit unions offered in July 2009 and December 2008.
The study found that 100% of the credit cards continue practices that will be outlawed by the CARD Act. The lowest advertised interest rates have increased by more than 20% in the past year. None of the 12 largest banks currently issue cards that would meet the requirements of the CARD Act.
“It seems that a credit card issuer could gain a distinct competitive advantage by the early implementation of the provisions of the CARD Act. But that is not being done. It seems that issuers are turning their back on the public outcry for reform and instead want to raise rates as much as possible before these interest rate provisions go into effect in February 2010,” said Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.
The Pew study found that cardholders have not benefited from the historically low interest rates, even though the Federal Funds rate is almost 0%. The lowest advertised rates increased by more than 20% from December 2008 to July 2009 while the highest advertised rates increased 13% during that time period. Discover had the biggest jump in the lowest advertised rates, going from 9.99% to 12.99%. Bank of America had the largest increase in the highest advertised rates, increasing from 14.99% to 18.24%.
The report is also one of the first credit card comparisons between banks and credit unions. It confirms that credit unions offer lower rates and lower penalties than banks. The findings from the Pew study:
* Advertised rates were 20% lower at credit unions. These rates ranged from 9.9% to 13.75% annually at credit unions, compared to 12.29% to 17.99% annually for banks.
* Penalty charges at credit unions are less frequent and less severe than at banks. Credit union penalty interest rates averaged 17.99% compared to 28.99% at banks. In addition, these penalty interest rates at credit unions were less likely to last indefinitely; one-third would terminate after three to twelve months of on-time payments. They could last indefinitely at banks, even after on-time payments.
“If you are a member of a credit union and are looking for a new credit card, be sure to look at those offered by your credit union. Compare those cards to others on the market and you could be pleasantly surprised,” said Hardekopf.
LowCards.com ( http://www.lowcards.com ) simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index ( http://www.lowcards.com/CreditCardIndex.aspx ) is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1060 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for nine years.
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The average interchange fee in the U.S. is seven times the interchange fee set by Visa and MasterCard in countries throughout the rest of the world. Using 2008 figures, if the interchange fee charged by credit card issuers was decreased (via comprehensive credit card reform legislation) from the current 2.10% to 0.60%, the result would be an annual savings of approximately $34.3 billion for U.S. merchants and consumers.
Let’s be clear. The interchange fee is a hidden tax, just not a tax subject to political control or for which there is any discernible social benefit. Decreasing, and imposing a transparent tax on, the interchange fee would have the same stimulus effect of a tax break, but without an impact on the federal budget.
The following article discusses the need for comprehensive, standardized, simplified, and transparent credit card reform legislation.
http://www.csnews.com/csnews/images/pdf/creditcardreform.pdf