A new study by CardHub rates issuer progress in making applications more transparent in the wake of CARD Act reforms. Some of the news was good:
Issuers are making decent strides when it comes to spelling out the major terms and conditions of their cards. “Overall, the disparity between the highest and the lowest score is much less in 2011 than it was in the 2010 study,” the authors noted. The biggest gainer was U.S. Bank, which leapfrogged from 10th to the four spot on the list this year; a 32.1 percentage point increase raised its overall score to 91.4 percent. Capital One and Bank of America were numbers one and two, respectively; both were in the same spots as last year, but each raised their total score by a couple of points.
One area highlighted as a problem, however, was understanding rewards programs (although these were not under the jurisdiction of the CARD Act/Reg Z).
But CardHub’s research does highlight some areas where credit card companies still don’t divulge enough information to prospective cardholders. For instance, a consumer might have to go digging through pages of fine print before figuring out exactly how much rewards are worth. While issuers love to tout the number of points or miles a user can rack up for every dollar they spend, what’s often murkier is determining how many you’ll need to redeem to get a statement credit, airline ticket or merchandise reward.
Disclosing the APR for purchases turned out to be a continuing problem, at least in the context of online applications that a consumer might be reviewing.
In a discouraging finding, CardHub also notes that some issuers aren’t clear about the interest rate a customer will pay for purchases. This was a more limited problem, but this is also one of the most basic things a consumer should know about a card for which they’re applying. In some cases, a visitor to the issuer’s website has to click through numerous pages to find these details; other times, the company will throw in some vague wording like “rates as low as,” which does little to inform a consumer how much they can expect to pay.
