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CR poll: Consumers angry at credit card companies

October 5, 2009


Forty-Five percent of consumers say they are paying less with credit than a year ago.

YONKERS, NY — Credit card holders are angry. More than a one-third (32%) have paid off and closed a card since January 2008, and half of those that canceled did so in direct response to the actions of credit-card issuers, such as cutting limits, hiking rates, or imposing fees, according to a national poll by Consumer Reports.

Twenty-one percent of respondents said they were treated unfairly by card companies, and only 41 percent said they were highly satisfied with their card issuer, making credit cards one of the lowestrated services that Consumer Reports covers.

The level of public anger about card issuers shows in the results of Consumer Reports nationally representative survey of 1,211 credit card users, conducted in July, as well as in scores of irate letters and e-mails Consumer Reports has received from readers.

The survey also found that 45 percent of respondents say they are charging less, 43 percent say they are spending about the same, and 11 percent are charging more than they did a year ago.

The surveys found that one-third of Americans say they don’t own a credit card. Of those
Americans who use them, here’s how much money they owe:

• 54% pay their balances in full each month
• 13% carry balances over $10,000 (Median $17,366)
• 33% carry balances up to $10,000 (Median $2,554)

Consumer Reports survey showed credit-card users tended to fall into three camps. One group is made up of consumers who generally pay their bills on time but use cards for convenience or to rack up rewards. Then there are those who reported moderate balances and reasonable prospects of eventually paying off that debt. The third group includes consumers with debts totaling $10,000 or more, often from spending for emergencies; 44 percent of that group said they wouldn’t be able to survive financially over the next six months without relying on their credit cards to meet monthly expenses.

Depending on which camp your credit needs fall into, Consumer Reports’ November report offers a complete strategy guide to dealing with credit-card issues, finding the right cards for your needs, and protecting your credit score. The report is available at www.ConsumerReports.org or in the November issue.

Where to Look For Good Cards

Finding a good credit card can take a bit of work. Check for deals that are offered through
CardRatings.com, FatWallet.com, and other Internet sites. Those sites sometimes have a direct link to an offer not generally available or a coupon that will get consumers a special rate.

Credit-union cards. Joining a group can make consumers eligible for some good creditunion cards. PenFed, the Pentagon Federal Credit Union’s card is available to members of the National Military Family Association, which anyone can join for $20. Employers might provide access to a credit union. Cards issued by the Addison Avenue Federal Credit Union carry APRs as low as 5.24 percent for employees of Hewlett-Packard, Cisco, Agilent Technologies, and other tech companies. The Digital Federal Credit Union offers attractive cards to employees of its more than 700 member companies.

Association cards. USAA offers rewards cards with interest rates as low as 7.75 percent for current and retired military personnel and their families. The NEA Platinum Plus card, available to teachers who are members of the National Education Association,
offers a 6.24 percent APR and 0 percent on balance transfers for 12 months, with transfer
fees capped at $30.

Specialty rewards cards. The TrueEarnings Costco card from American Express is a
good cash-back card if you are a Costco member and pay off your balance in full each
month. It carries no annual fee and pays rewards of 1 to 3 percent, depending on what
you purchase. Despite a $45 annual fee after the first year, the Starwood Preferred Guest
card from American Express can be worthwhile if you’re a frequent traveler and you stay
at Starwood hotels.

Consumer Reports experts took a look at many of the available cards. Depending on your
personal credit situation, they suggest you consider the following options which appear to have good terms and no annual fees:

For balance-transfer cards: Consider these if you’re currently paying high rates on existing balances.
American Express Clear, PenFed Visa Platinum; People’s United Bank Platinum MasterCard

Low-rate cards: Good for people who regularly carry a balance.
Iberiabank Visa Classic, Simmons First Visa Platinum

Cash-back cards: Best for cardholders who pay off their balances in full each month
American Express Blue Cash, Capital One No Hassle Cash Rewards, Fidelity Rewards American Express, Schwab Invest First Visa

For more information on these cards or how to find the best card for your needs checkoutConsumer Reports November report available at www.ConsumerReports.org or in the November issue on newsstands October 6, 2009.

The Consumer Reports Credit Card Users poll used a nationally representative sample of 1,211 adults. The survey was conducted via telephone in July, 2009. The margin of sampling error is +/-2.8% with a 95% confidence level.

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C. Matt Fields, 914.378.2454


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