Credit Card Complaints Addressed In CARD Act Still Drive Consumer Anger

Even though last year's financial reform was supposed to make credit cards more transparent, consumers are still complaining about interest rates, billing disputes and confusing credit card terms.

A sizable minority of the more than 5,000 complaints about credit cards submitted to the Consumer Financial Protection Bureau between mid-July and mid-October involved issues that were supposedly addressed by the CARD Act, signed into law in February 2010. The law required greater clarity in the language of credit card agreements and gave consumers a longer grace period to pay balances before incurring late fees, among other provisions.

"The CARD Act, which was billed as being the savior for credit card users, was supposed to really do away with any confusion about the interest rate," said John Ulzheimer, president of consumer education at "A pretty significant percentage of complaints had to do with stuff that the CARD Act was supposed to eliminate."

Before the financial crisis, Americans had become more reliant on credit card debt as credit card issuers pushed to sign them up. U.S. households' total revolving debt increased nearly fivefold in the 20 years leading up to 2008. But consumers appear to be pulling back now, as credit card delinquencies hit a 16-year low last quarter, according to the Federal Reserve.

Credit cards are the first financial product about which the new Consumer Financial Protection Bureau is soliciting complaints, but the agency plans soon to take on another area of widespread consumer anger, according to its Nov. 30 report. The bureau's complaint system for mortgages, which could draw criticism from an already skeptical financial industry, will be ready by the end of 2011. By the end of 2012, the bureau aims to be ready to handle consumer complaints about a variety of financial products.

About 24 percent of the credit card complaints discussed in the report concerned APR/interest rates and billing disputes, issues addressed in the CARD Act, according to Ulzheimer. Still, credit card issuers partially or fully resolved 74 percent of consumer complaints, according to the report.

"It's obvious that consumers have complained about fees with credit cards for years. That's why we had some reform," said Lynnette Khalfani-Cox, contributing editor for "Even though we've had credit card reform, it's not a dead issue."

The report also highlighted confusion about credit card agreements, mirroring the findings of other studies. Just 35 percent of consumers said they fully understood their credit card terms, according to a J.D. Power and Associates survey released in August.

"When consumers contact us, we get a snapshot of how the consumer finance markets are working," said Raj Date, the Treasury official responsible for the Consumer Financial Protection Bureau, in a statement accompanying the bureau report. "And we are learning that there is a lot of consumer confusion about credit card terms."

The bureau may have focused on consumer confusion because many of the complaints fall into such categories as application processing delays, rewards, and sales of accounts, indicating that consumers are puzzled when their credit card company does something that is technically legal but that they believe is unfair, Khalfani-Cox said.

"They probably highlighted the fact that consumers don't understand because a lot of those complaints were about things that were perfectly legal [and] are actually fully disclosed," Khalfani-Cox said. "It's just in the fine print."

The Nov. 30 report was the first of its kind for the Consumer Financial Protection Bureau, which was created by the Dodd-Frank financial reform legislation and serves as a watchdog on companies that provide financial services to consumers. Once the bureau gathers enough complaint data, it hopes to identify consumer issues that the agency can then address.

One such issue may be identity theft, which accounted for slightly more than 10 percent of the complaints, the third-largest share. "The bureau's credit card complaint center really may be an early warning alert system for identity theft," Khalfani-Cox said. "If you can get regulators involved early, they may be able to better spot patterns."

Along with the report, the bureau announced that it is soliciting public feedback on its proposal to release a public database of complaints, which would withhold confidential personal information but might identify the companies complained about.

The Consumer Financial Protection Bureau has been the subject of much controversy since it was first proposed. Consumer advocates welcomed the bureau, while the financial industry has criticized it as a form of over-regulation.

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