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Survey results expose more of the same bad conduct from credit card issuers

07.08.09
By John Ulzheimer

On July 8th, Credit.com released the summary results of a survey they commissioned, which exposes a continuing pattern of abusive practices of many credit card issuers. The results are troubling. Even despite a new series of restrictions on credit card practices that will become enforceable law near the end of February of 2010, a third of consumers say their credit card issuer has recently done one or more of the following to their account terms:

  • Increased their interest rate by 19 percent (up from 15 percent in the February survey)
  • Increased their fees by 14 percent
  • Lowered their credit limit by 14 percent (up from 8 percent in the February survey)
  • Increased their minimum payment due by 12 percent
  • Reduced their rewards programs by 9 percent
Adam Levin, Co-founder of Credit.com, accurately describes these activities as a “reign of terror.” And while Levin’s description might seem an exaggeration, I think he is right on and accurately describes the feelings of millions of credit cardholders who are living through these things right now.

The good news is that many of these actions will become much less prevalent once the CARD Act finally goes into effect. They won’t become a thing of the past, because in many cases the credit card issuer can still make adverse changes to your accounts, but only in reaction to something you’ve done to deserve the treatment.

Of course, many of the things that are happening to consumers can result in lower credit scores, either directly or indirectly. The single most damaging event described above is the lowering of credit limits, which is up to 14 percent from 8 percent in Credit.com’s earlier survey performed in February 2009. As consumers’ credit limits are lowered it’s completely possible that their scores will follow, especially if they don’t reduce the amount of credit card debt they’re carrying.  

I fully expect these actions to continue through 2009 as credit card issuers proactively clean house while it’s still legal to do so. So, stay tuned for the results of our Q3 survey results. My guess is that they won’t paint a rosy picture.  



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