Credit Cards So Far Avoid Worst-Case Predictions

Publication: Associated Press

Author: Eileen AJ Connelly

08/02/2010 -  The benefits of stricter credit card regulations appear to have come without the predicted drawbacks — at least so far.

It's been nearly six months since a sweeping law changed how credit card companies are able to hike interest rates, charge over-the-limit fees and apply payments. Because the tighter regulations cut into several profit centers, banks were widely expected to replace lost revenue by bringing back annual fees, cutting expensive reward programs and doing away with limited time, ultra-low rates for new customers.

But data suggests none of those things has happened.

The number of new credit card offers has leaped from the lows hit during the recession, and the offers landing in mailboxes don't reflect the predicted changes.


And while some of the signs are positive for consumers, one big change observers are noting is a spike in interest rates. The Pew Trust found that advertised rates for purchases increased to 20.99 percent in March 2010, from 12.99 percent in December 2008, when it started collecting data.

Another change, which may be less obvious to many consumers, is an increase in the fees for transferring balances from one card to another. Banks added the fees a few years ago and typically charged up to 3 percent. Those fees have been hiked to 4 and 5 percent in most cases, which could wipe out much of the savings connected with transferring a balance.

Nick Bourke, the Pew Trust's credit card project director, said there is some evidence that card companies are taking time to respond to regulatory changes.

"I do think it's natural and expected that we could see this industry evolve over time," he said. "I think we'll see new changes being tested. Some will stick and some won't. It's a question of what consumers will accept."

Read the full article, Credit Cards So Far Avoid Worst-Case Predictions on the Associated Press Web site.

Pew is no longer active in this line of work, but for more information visit the Safe Credit Cards Project on

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