Fewer Americans Feel Credit Card Companies Treat Them Unfairly, but Problems Persist

December 2011 Cover YONKERS, NY — New federal rules barring many abusive practices by credit-card issuers seem to be having an effect: Only 12 percent of Americans said their credit-card companies had generally treated them unfairly, according to Consumer Reports’ nationwide survey, down from 15 percent in 2010, and 22 percent in 2009.

And more people are being approved: Only 14 percent were denied a card in 2011, compared with 24 percent last year.

But that doesn’t mean consumers should let their guard down: Thirty-five percent of survey respondents said in the past year they had experienced at least one credit-card problem, such as a new annual fee, higher interest rate, lower credit limit, or limits on rewards.

With the protections of the 2009 Credit CARD Act in full effect, the nationally representative survey shows a slightly lower level of dissatisfaction among Americans with their credit cards than last year. However, credit cards remain one of the lowest-rated services Consumer Reports has ever analyzed; only 51 percent of respondents indicated they were highly satisfied with their cards.

The survey, conducted in July by the Consumer Reports National Research Center, also shows that consumers are carrying less credit-card debt, with median balances of $3,414 down from $3,793 in 2010.

“Things are looking rosier for credit-card holders,” said Noreen Perrotta, Finance Editor, Consumer Reports. “Consumers are paying down balances and facing fewer punitive actions by credit-card companies such as higher rates, late-payment fees, and canceled cards. But average interest rates on new cards are still up and you have to read the fine print of rewards programs.”

The full report on credit cards is available in the December issue of Consumer Reports on newsstands November 1st and to subscribers of www.ConsumerReports.org.

Attractive offers

With reports of delinquencies and defaults down, card issuers have resumed stuffing your mailbox with offers, many of them featuring low-rate introductory deals or lucrative rewards. If you’re among the 56 percent of Americans who pay off their card balances each month, you might want to take advantage of offers promising introductory bonuses of cash, miles, or points. The best rewards-card deals are reserved for people with credit scores of 730 to 740 and up.

If you regularly carry a balance, a rewards card probably won’t be a good fit, since they tend to have higher interest rates than standard cards, and you might pay more in finance charges than you would gain in rewards.

Pick the right card for your habits

The best card for consumers depends on whether they pay their balances in full each month, and, if so, what types of rewards they’re looking for. Consumer Reports surveyed the marketplace and found the following enticing deals. Cards are listed in alphabetical order.

CASH-BACK CARDS (Higher APRs make these cards most suitable for people who pay off balances in full each month): American Express Blue Cash Everyday, Capital One Cash, Chase Freedom, Fidelity Rewards American Express, PenFed Platinum Cash Rewards (available to members of the Pentagon Federal Credit Union).
TRAVEL CARDS (These cards offer excellent rewards for frequent travelers): Capital One Venture Rewards, Chase Sapphire Preferred, PenFed Premium Travel Rewards American Express.
LOW-INTEREST CARDS (For consumers who carry a balance or want to transfer a balance): Iberia Bank Visa Classic, PenFed Promise Visa, Simmons First Visa Platinum.

Consumer Reports Credit Card Use survey is based on an online nationally representative sample of American adults, conducted by the Consumer Reports National Research Center. A total of 1,258 interviews were completed among adults aged 18+. Interviewing took place between July 1 and July 10, 2011. The margin of error is +/- 2.8 % at the 95 % confidence level.

Consumer Reports is the world’s largest independent product-testing organization. Using its more than 50 labs, auto test center, and survey research center, the nonprofit rates thousands of products and services annually. Founded in 1936, Consumer Reports has over 8 million subscribers to its magazine, website, and other publications. Its advocacy division, Consumers Union, works for health reform, food and product safety, financial reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.

About Consumer Reports

Consumer Reports is a nonprofit membership organization that works side by side with consumers to create a fairer, safer, and healthier world. For 80 years, CR has provided evidence-based product testing and ratings, rigorous research, hard-hitting investigative journalism, public education, and steadfast policy action on behalf of consumers’ interests. Unconstrained by advertising or other commercial influences, CR has exposed landmark public health and safety issues and strives to be a catalyst for pro-consumer changes in the marketplace. From championing responsible auto safety standards, to winning food and water protections, to enhancing healthcare quality, to fighting back against predatory lenders in the financial markets, Consumer Reports has always been on the front lines, raising the voices of consumers.

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