After a tumultuous 2009 during which credit card complaints spiked to unprecedented levels, consumer complaints have decreased significantly in 2010. Much of this decrease can likely be attributed to the fact that most credit card companies wrapped up complaint generating rate increases during the final quarter of 2009. The rest can be attributed to the fact that the new credit card laws will sharply inhibit the ability of credit card companies to engage in complaint creating behaviors.
In 2009, the most common credit card complaints centered on interest rate increases. As credit card companies prepared for the roll out of the CARD Act, many utilized proactive interest rate increases simply because the new law will prohibit such actions. Unfortunately, credit card companies were only required to send rate increase notices via standard mail and many people unwittingly accepted rate increases because they neglected to read the notices or simply tossed them in the garbage thinking they were junk mail.
Since the start of 2010, nearly all interest rate increase complaints have been from Citi credit card holders, many of whom did not read opt out notices sent last fall and have just learned that their new interest rate is 29.99%.
The current calm may last a few more months, as credit card companies will need some time to re-evaluate lending standards and other practices while conforming to the new laws. This will likely provide a breather for consumers, but could ultimately be nothing more than the center of the hurricane. Should the economy fail to recover, credit card companies will likely use the tools available to them, such as credit limit decreases and rate increases on future purchases, to pad the bottom line and help them stem the flood of red ink on their balance sheets.
For now, however, all is quiet on the credit card front.
-Jeffrey Weber
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