Several credit card issuers this month are taking more “positive, promotional” approaches to introducing new policies and billing-statement changes mandated by a federal law that goes into effect next week, according to new research by Corporate Insight, a New York-based market-research firm.
Through the second week of February, more than half of 11 large card issuers the firm monitors had failed to “prominently” warn customers about the pending changes that go into effect Feb. 22, while four of the largest issuers have gone out of their way to tout the changes, Doug Miller, Corporate Insight senior analyst, tells PaymentsSource.
Bank of America Corp., Barclays N.A., Capital One Financial Corp. and Discover Financial Services are among the issuers that were the first to prominently tout billing-statement changes and new policies on public and private Web sites and in direct mailings, Miller says.
“Bank of America has probably gone the furthest in almost turning these mandated changes into a promotional opportunity,” Miller says, noting BofA has prominently touted the changes on its public and private Web sites under the “Clarity Commitment” headline introduced on its Web sites and in customer mailings in December. The issuer also this month added a brochure to February statements explaining the changes.
“While issuers were required to implement new policies, a few have seized this as a positive marketing opportunity, which is pretty interesting,” Miller notes.
Other card issuers Corporate Insight monitors include American Express Co., JPMorgan Chase & Co., Citigroup Inc., HSBC N.A., U.S. Bancorp, and Wells Fargo & Co. and its subsidiary Wachovia Corp. Each of those issuers is in various stages of notifying customers of the changes, but as of last week none had achieved the level of “prominently” marketing the changes, Miller says, based on the standard of noting changes in public and private Web sites and in specially crafted direct-mail communications or statement messages.
Some issuers so far have merely mailed customers densely worded, recently revised card agreements containing the new provisions the Credit Card Accountability, Responsibility and Disclosure Act requires, Miller says. President Obama signed the legislation into law last May.
“Some issuers may be waiting until closer to the deadline, but many have done the minimum to communicate changes,” Miller says.
Those provisions include new disclosures on billing statements explaining how long it would take to pay off a balance making only minimum payments and a breakdown between interest and principal. Billing statements also must include a toll-free number to call for credit-counseling help.
Other new provisions, usually explained in revised card agreements, include no interest-rate changes for the first 12 months after opening an account, rate increases require 45 days’ notice and must apply only to new charges, interest rates cannot be increased unless the cardholder is more than 60 days late with a payment, and payments must be applied first to higher-interest debts.
Issuers also no longer can charge fees to cardholders who make payments online or by telephone (with some exceptions).
Most issuers have managed to introduce the new disclosure information on statements that are about the same number of pages as those they previously mailed, Miller says. “When the regulations were first announced, there were dire warnings that issuers would have difficulty adding all this information to statements,” he says. “But most have simply rearranged the information and taken advantage of previous blank space to fit it all in.”