A populist atmosphere of pushing
consumer rights to the forefront of the US economic agenda has led
to a raft of measures, both political and legislative, being put
into place in recent weeks, aimed at putting a stop to “unfair”
card billing and fee practices.

US credit card issuers and payment
networks were not expecting a sympathetic hearing from President
Barack Obama when he met representatives from 13 card-related
organisations on 23 April. He warned them they will face new
regulations and increased scrutiny as he attempts to portray
himself as a consumer champion.

Representatives from Bank of America, American
Express, JPMorgan Chase, Capital One, Citigroup, Barclays, Visa,
MasterCard, Wells Fargo, US Bancorp, HSBC, USAA Savings Bank and
the American Bankers Association (ABA) duly filed into the White
House to hear President Obama tell them that while he recognised
that credit cards were a crucial source of finance for families and
small businesses, the terms and conditions attached to them were
too confusing and had led to consumers paying out more in fees and
interest than they had expected.

“The days of any time, any reason rate hikes
and late fee traps have to end. No more fine print, no more
confusing terms and conditions,” Obama told reporters after the

“We want to preserve the credit card market,
but we also want to do so in a way that eliminates some of the
abuses and some of the problems that a lot of people are familiar

ABA president and CEO Edward Yingling said
after the meeting that measures to improve the situation had
already been established by regulators, such as Federal Reserve
regulations outlined in December 2008 that will take effect from
July 2010.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

“These sweeping new rules directly address
many of the issues raised by the officials and by members of
Congress. The card issuers are currently hard at work implementing
these new rules, although the Federal Reserve itself has indicated
these rules are likely to shrink credit availability and result in
increased rates for some consumers.

“The goal of any additional efforts should be
to achieve the right balance between enhancing consumer protections
and ensuring that credit remains available to consumers and small
businesses at a reasonable cost.”

However, various consumer-orientated credit
card reform bills – such as the Credit Cardholders’ Bill of Rights
and the Credit Card Accountability Responsibility and Disclosure
Act – are currently making their way through the US Congress and
Senate respectively.

According to Moshe Orenbuch, an analyst at
Credit Suisse First Boston, both the Congress and the Senate bills
go further in regulating the credit card industry than the Federal
Reserve bills.

“The competitive response to the proposed
changes will dictate the effects of the changes on credit card
industry profitability,” he told CI.

“Given increased limitations on pricing
flexibility, we expect issuers to use higher ‘go-to’ rates after
promotional periods expire in order to protect profitability,”
Orenbuch added.


Credit card reforms*


Federal Reserve

Senate bill

Billing statement mail-out

21 days before due date

21 days before due date

Allocation of payments

Three allocation options

Balances with highest interest rate first

Universal default

No provision


Interest rate disclosure

No provision

45 days notice

Fee restrictions

No provision

No charges on credit card debt or interest on
transaction fees

Overlimit fees

No fee imposed when card limit is exceeded
because hold was placed on available credit

Fixed credit limit option available to
card-holders which cannot be exceeded; no more than one overlimit
fee per billing cycle



Prohibits issuing cards to people under 21
except under specific terms

* not all measures listed Source:
CI, Credit Suisse First Boston