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Nearly every U.S. credit card has at least one feature the Federal Reserve and other regulators would deem "unfair and deceptive" under new rules finalized last year, according to a new Pew Charitable Trusts study. The Philadelphia-based nonprofit organization said it studied 400 cards offered by 12 of the nation's largest credit card issuers and its research uncovered widespread examples of card industry practices that could hurt consumers financially. Researchers examined the card offers on Dec. 15 and 16, 2008. According to the study, 93% of card agreements enabled the issuer to raise any interest rate at any time, while 87% of card agreements enabled the issuer to impose automatic penalty interest rate increases on all credit card balances, even if the account was not 30 days or more past due. The median penalty interest rate on cards studied was 27.99% per year. Some 72% of cards studied included offers of low promotional rates revocable after a single late payment, and 92% of cards included a fee for exceeding the credit limit. The study also found that between 2007 and 2008, issuers raised interest rates on nearly one quarter of credit card accounts, costing consumers collectively more than $10 billion. As a result of its research, Pew developed its own Safe Credit Card Standards to protect consumers that parallel key provisions of the Fed's new rules that are set to go into effect July 1, 2010. Those rules include banning interest rate increases on existing debt, except when payments are at least 30 days late and requiring issuers to apply cardholders' payments first to their highest-interest balances. But Pew recommends immediate enactment of legislation that would go further, including eliminating all over-limit and other penalty fees other than fees for payments made more than 30 days late and banning fees for making or expediting payments. "Only Congress can help the tens of millions of Americans who are affected by (practices deemed unfair and deceptive) now," the researchers wrote.
