New restrictions on card issuers raising interest on existing balances under the Credit Card Accountability, Responsibility and Disclosure Act is far more important to consumers than the law’s other provisions that also went into effect last week, the results of a recent poll suggest.
Among the 3,527 individuals participating in the online poll featured on the National Foundation for Credit Counseling’s Web site between Feb. 1 and Feb. 28, 72% said the rule barring hikes on existing card interest rates was the most important to them.
Four other key provisions ranked much lower in importance.
Some 10% of respondents said a provision requiring issuers to explain to cardholders on billing statements how long it would take to pay off their balance was most important to them, while 7% of respondents said a rule requiring issuers to give cardholders 45 days’ notice of upcoming interest-rate increases and another 7% said the requirement issuers provide them information about credit-counseling options on billing statements was most important. Some 4% of respondents cited as most important a provision preventing issuers from charging more than one over-limit fee per billing cycle.
Consumers’ preference for the provision preventing interest-rate increases on existing balances underscores the difficulty some consumers face in paying down credit card debt, the foundation says.
“This protection really struck a nerve with consumers, as many have experienced firsthand how difficult, or sometimes impossible, it is to make even the minimum required monthly payment after an interest rate increase,” the foundation said in a statement. “Further, when paying high interest on a high balance, debt reduction is discouraging slow, sometimes taking decades to become debt-free.”
The new law, which President Barack Obama signed into law in May went into effect on Feb. 22 (
