BillShrink Study Reveals Credit Card Rates Still on the Rise in Advance of Feb. 22 Credit Card Act Deadline & Predicts New Fees on the Way Consumers can expect a rise in fees as issuers anticipate declining profits following CARD Act restrictions
REDWOOD CITY, Calif., Feb. 22 /PRNewswire/ -- BillShrink (www.billshrink.com), the independent, free online service that gives personalized savings recommendations on credit cards, reveals its latest survey showing that issuers have raised rates an average of 16% since the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) was first introduced last year. In addition, BillShrink uncovers that many issuers are waiting until the last minute (today, February 22, 2010) to comply with all of the regulations that protect cardholders from unfair billing practices.
From February 2009 to February 2010, BillShrink reviewed more than 150 credit cards to uncover changes in fees and rates:
Credit card rate increases
- One-third of issuers raised rates upwards of 20-30%
- The average increase across all issuers was 16%, with Chase and Wells Fargo increasing rates the least over the last year
Issuers have until today, February 22, 2010 to comply with all the new regulations under the CARD Act. American Express, Chase, Discover and Wells Fargo complied early in the fall of 2009 to stop double-cycle billing and penalizing cardholders who may have defaulted on another card. However, the majority of issuers delayed as long as possible to apply fair allocation of payments and elimination of fees for paying bills over the phone.
For detail on CARD protections and which new rules issuers have been the most reluctant to enact new regulations, see Examining the Credit CARD Act of 2009.
Commenting on the CARD Act 2009, Samir Kothari, co-founder of BillShrink, said: "We've been carefully monitoring rate changes and compliance for over a year and have seen issuers sneak in rate hikes to brace for the new regulations, rather than using the grace period to phase out prohibitive practices. After February 22, we expect to see more cards with annual fees, as well as a rise in other charges like balance transfer fees , cash advance and even inactivity charges. The good news is that there is some level of protection from consumer-unfriendly billing practices."
BillShrink's Credit Cardholder's Bill of Rights has been tracking compliance and allowing cardholders to see whether or not their card complies with the rules.
Editor's Note: BillShrink's study included 150 cards that were active from February 11, 2009 through February 6, 2010. BillShrink reviewed non-introductory rates (rather than promotional rates) as they most accurately represent the rate an individual would pay long term. All rates are averages across multiple cards. BillShrink evaluated cards from American Express, Bank of America, Capital One, Chase, Citibank, Discover, First National Bank of Omaha, US Bank and Wells Fargo. A 20% rate increase is relative to what it was, not in absolute terms (e.g. if a purchase rate used to be 10% and now it is 12%, that is a 20% lift).
About BillShrink (www.billshrink.com)
BillShrink is the free online money-saving service designed to help people lower their bills. Every day, thousands of people come onto the site and find an average of $1500 in savings on their most common bills.
In an era when eight in 10 Americans overpay for expenses like credit cards and wireless bills, BillShrink empowers and inspires people to become savvy shoppers by simplifying all the complex pricing structures to show what true cost of ownership means for their wallets. The company has found $1 billion in savings for Americans.
BillShrink is a decision-oriented site that helps users discover and determine the best money-saving options. Think of BillShrink as a personal finance matchmaker. After answering a few simple questions about spending and savings behavior, BillShrink users see savings recommendations tailored to their unique needs. In order to provide individualized and unbiased recommendations, the company tracks more than 10 million cell phone plan combinations, 300 bank rates, 240 credit cards and 150,000 gas stations, to present the best money-saving options available. BillShrink then keeps the savings coming by alerting users when a better deal comes along.
BillShrink was named one of the "Best Web Sites" by Kiplinger's and has been featured in the country's leading news sources including The Wall Street Journal, The New York Times, Consumer Reports, Fortune, The Today Show, CNN, ABC and CBS. The company publishes the popular "Shrinkage is Good" blog, which features commentary on the latest economic news and savings tips.
The Silicon Valley-based company was founded in 2007 by Schwark Satyavolu and Samir Kothari. For more information, please visit www.BillShrink.com. Follow us on Twitter (www.twitter.com/BillShrink) and become a BillShrink fan on Facebook (www.facebook.com/BillShrink).