CFPB lists our biggest complaints with credit cards
Hard-to-claim rewards, hard-to-understand rules lead consumers to gripe
Complaints about credit cards rose 9 percent in the second quarter compared to the second quarter of 2015, the U.S. Consumer Financial Protection Bureau said, as problems with rates, fees, rewards and other issues riled card users.
The CFPB's monthly complaint report for July spotlighted credit card complaint data and the reasons consumers gave for being irked with a card issuer. The bureau heard 1,990 complaints about plastic during the quarter, up from 1,824 a year ago. In the five years since it began hearing card complaints in July 2011, the bureau has handled 97,100 such gripes.
“Credit cards are an important tool in the day-to-day financial lives of a large number of consumers,” CFPB Director Richard Cordray said in a written statement announcing the report. “It is important that credit card companies are being straightforward and clear about the costs and fees associated with their products so consumers have the information they need to make informed financial decisions.”
It is important that credit card companies are being straightforward and clear about the costs and fees associated with their products so consumers have the information they need to make informed financial decisions.
|— Richard Cordray
Consumer Financial Protection Bureau
Leading sources of credit card complaints
Among the sources of complaints highlighted were:
- Fees and costs. Problems often arose when people got hit by late fees they thought were unfair, such as when an automatic payment failed to go through, or a statement wasn't on time.
- Accounts with more than one balance. People said they were surprised by the way their payments were applied when their account had different balances for purchases, balance transfers, cash advances or deferred-interest purchases.
- Rewards. “Consumers continue to complain about misleading offers for rewards programs,” the report said. Bonus points, miles or cash back were not as easy to collect as people expected, partly because terms and conditions were not clearly explained, the report said.
- Account opening and closing. People felt their credit wasn't evaluated fairly, and that card companies failed to explain the reasons why interest rates and credit limits were set at unfavorable levels. The unexplained closing of accounts also surprised people and hurt their credit score, the report said. While companies said account closing was most often prompted by default or suspected fraud, “Consumers also often express frustration when accounts are closed due to inactivity,” the report said.
Company, geographic differences
While total complaints are up for the second quarter, some big card issuers are seeing their numbers decline. U.S. Bancorp complaints fell 43 percent while Discover gripes fell 35 percent. The biggest gainers were Citibank, up 56 percent and BarclayCard, 34 percent.
Geographically, many energy-producing states saw upturns in complaints, possibly indicating that economic troubles are translating into friction between card companies and newly unemployed or underemployed workers in the faltering energy industry. Complaints were up 18 percent in Texas, 23 percent in Oklahoma, 47 percent in Louisiana, and 100 percent each in Wyoming and North Dakota.
Bank groups have lambasted the publicly available complaint data, saying it repeats unsubstantiated gripes. The CFPB “has become a purveyor of at best unverified, and potentially false, information,” the American Bankers Association said in a regulatory comment letter in August 2015. Consumer advocates support the complaint data, calling it an important tool for exposing problems in card company practices. The database “is now filled with first-hand information from consumer users of financial services,” which can be searched online, Consumer Action said in a June 2015 news release.
See related: Consumer bureau expands complaint data
- Powell: Fed remains patient in setting rates – The Federal Reserve will remain patient in assessing the need for rate hikes this year, according to Fed Chairman Jerome Powell ...
- Credit freezes are now free ? but do you need one? – Credit freezes, which keep lenders and other companies from viewing your credit, are now free. We compared them to other credit protection tools, including locks and monitoring services. Here's how to use them all to protect yourself ...
- Employer credit checks: Who does them, how they work and what laws apply – If you're applying for a new job, a credit check could determine your fate, depending on the position and where it's based. Here's how they work and what to expect ...