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A Quick Check To See How Credit Reform Is Going

There’s a fascinating study by the Center For Responsible Lending (CRL) that was just published. It takes a look at how credit card issuers have responded to the new Federal Reserve rule changes announced in late 2008. The news ain’t too good….

Here are a few quotes from the study (made by Joshua M. Frank, a senior researcher at CRL):

We took a quick sampling of credit card issuers’ recent activities to see how they have responded to the Federal Reserve rule changes that were announced in December 2008 but won’t take effect until July 2010. We found the top eight issuers, who account for 80 percent of credit card balances, are raising interest rates on a larger portion of customers than usual and increasing the number of fees they impose. The new Fed rule will ban some but not all of these activities.

Perhaps most notable is what these issuers—Citigroup, Bank of America, JP Morgan Chase, Capital One, HSBC, Discover, American Express, and Wells Fargo—have not done. All continue to apply a customer’s monthly payments to the least costly balance first, leaving the most expensive to continue to grow. None have changed their policy of imposing interest rate hikes for any reason, any time. Additionally, there is no evidence that any of these companies has expanded the period of time between when monthly bills are sent and when late fees apply.

So much for the voluntary adoption that legislators hoped for. I guess we’ll have to wait until next summer to see any real reform.