The CEO and president of the American Bankers Association highlighted some of the recent changes to the credit card industry that have helped consumers.
In an opinion piece for The Tennessean on March 21, 2007, American Bankers Association President and CEO Ed Yingling highlighted how recent changes in the credit card industry have been beneficial to consumers.
Yingling noted that the positive changes, as confirmed in a 2006 General Accountability Office report, include a major decline in credit card interest rates for the majority of U.S. consumers. Additionally, he explained that once-standard annual fees for credit cards have become relatively rare.
Meanwhile, innovation and competition within the credit card industry has made credit, which was once only for the affluent, accessible across the society. Websites allow consumers to compare cards, whether the consumer has bad credit or excellent credit.
However, the ABA president wrote, with the introduction of complex credit card products that may offer a number of features in one card, greater consumer choice has also brought with it the challenge for consumers of making smart credit card decisions.
Yingling explained that since credit cards offer what are effectively loans to consumers, terms and conditions must clearly lay out the details so cardholders can make the best choices. He said that the ABA is taking action to improve disclosures, often dictated by regulation, by working with the Federal Reserve to craft new, simpler disclosures by the end of 2007.
Yingling added that improved credit card disclosures need to be accompanied by education, with the U.S. needing to do a better job of improving consumers’ financial literacy. While the ABA Education Foundation and banks nationwide already offer education and credit counseling, the ABA remains committed to doing more, he said.
As Congress considers credit card issues, Yingling argued that the facts about credit cards need to remain in perspective. For example, over half of U.S. cardholders pay their balances in full each month, and that credit card balances make up just 3 percent of the debt shouldered by American households — a percentage that has declined during recent years.
Yingling suggested that Congress and regulators take a balanced but firm approach to regulation that maintains the many benefits of credit access, while further improving the experience of the credit card customer.