Banks and some pundits had predicted that credit card users would face skyrocketing interest rates, a spike in annual fees and a plethora of other negatives after stringent new rules on cards kicked in last year.
That is not what happened, according to a new look at the policies associated with credit cards issued by major banks and credit unions. The Pew Charitable Trusts Safe Credit Cards Project found instead that interest rates are steady with those charged last year, while most fees have dropped.
The stabilization of interest rates is key, because banks sharply raised rates in 2009 following the law's passage but before its implementation.
"Whatever increases in advertised interest rates we saw going into 2010 have not continued into 2011," said Nick Bourke, director of the Safe Credit Cards Project.
Median advertised interest rates for purchases on cards issued by banks are ranging from 12.99 percent to 20.99 percent, depending on a customer's credit history, according to the Pew study being released Tuesday. Credit union rates increased slightly from last year to between 9.99 percent and 17 percent. Penalty interest rates charged to those who make late payments, and cash advance interest rates have also held steady.
One caveat the study doesn't address, however, is that most credit cards now carry variable rates, so if the prime rate starts to rise, that would lead to consumers paying higher rates on their cards.
After examining credit card offers made in January compared with those of prior years, Pew also found that transaction surcharges for cash advances, balance transfers and international purchases changed only slightly. The study reviewed offers from the 12 largest banks and 12 largest credit union card issuers. Together those institutions control more than 90 percent of the outstanding credit card debt in the country.
"Consumers are enjoying safer, more transparently priced credit cards -- and banks and credit unions are able to compete on a more level playing field," Bourke said. The credit card regulations "created a new equilibrium where a number of policies the organization found "unfair or deceptive" a year ago have disappeared.
Among the study's findings:
Penalty fees have dropped.
A provision in the law that requires penalty fees to be "reasonable and proportional" for violations such as late payments led the Federal Reserve to cap penalty fees at $25, or up to $35 if it happens a second time in six months. That pushed the cost of fees down from a previous median of $39. Credit union cards remain at $25. More than 95 percent of cards charge late fees if payments don't arrive on time.
Over-limit fees are now rare.
Only 11 percent of bank-issued credit cards now have fees for charging more than the limit on a card, down from 23 percent a year ago. The largest credit unions have eliminated over-limit fees altogether.
Annual fees did not proliferate
The widespread expectation that most banks would start charging card users annual fees to make up for lost revenue was off the mark, although the number did rise significantly. Researchers found that 21 percent of banks charge an annual fee, up from 14 percent a year ago. The rate for credit unions remains stable at 14 percent.