Electronic billing is convenient, saves trees — but you might miss a payment
To start, it’s a trend. On billing statements and on websites, credit card companies are urging customers to “go paperless” and even offering incentives to do so. That’s why the National Consumer Law Center, a Boston-based advocacy group, looked into e-statements versus paper statements and published its findings in a March study: “Paper Statements: An Important Consumer Protection.”
The executive summary: Emailed statements might be fine for the slice of Americans who have access to reliable technology – desktop computers, printers stocked with ink and paper and a home-based broadband connection. For those who lack reliable technology, e-statements are probably more hassle than convenience.
“E-statements do have downsides,” says Chi Chi Wu, a National Consumer Law Center staff attorney and co-author of the study.
Financial experts can see why cardholders might be tempted to sign up for e-statements. “We’re in more of a tech age,” says Theresa Benitez, a certified credit counselor at American Financial Solutions, a nonprofit credit counseling firm in Bremerton, Washington. Her clients “want the convenience, they think it’s easier, or for environmental reasons,” she says. “It’s a personal decision,” she adds.
Melinda Opperman, chief relationship officer at Springboard Nonprofit Consumer Credit Management in Riverside, California, offers a few more reasons. Electronic statements might help prevent identity theft, as thieves can’t paw through your garbage and lift sensitive information from discarded paper statements. Accessibility to statements via smartphone is a lure, especially for people who travel frequently. So is the ability to link e-statements to budget-management apps such as Mint.com.
Opperman points out drawbacks, too. Improperly set spam filters can block e-statements, meaning consumers might not see them, miss making a payment and rack up interest payments and late fees. Remembering passwords and account numbers can be complicated for some people, she adds. Too, the safety of e-statements disappears if they’re viewed on a computer using a public Internet connection.
A history – or lack thereof – of e-statements can cause headaches for experts trying to dig clients out of debt, says Todd Moore, director of Education & Outreach at Trinity Debt Management in Cincinnati. “It’s a more complicated process,” he says, to sift through e-statements to find account numbers, interest rates and charges, and even identify services such as credit protection and monitoring. “A lot of those aren’t listed in an online statement,” Moore points out.
What’s there might be more difficult to read and retain. Maryanne Wolf, professor at Tufts University, Medford, Massachusetts, and director of its Center for Reading and Language Research, has studied how the brain processes material read on screen and read on paper. “There is less focused attention and concentration on screens, and thus less likelihood that errors will be caught,” Wolf says.
It’s a fact that credit card research corroborates. In late 2015, Chi Chi Wu, the National Consumer Law Center staff attorney, sifted through the Consumer Financial Protection Bureau complaint database to find information for a report on deferred-interest credit cards. Wu noticed that many complaints were about online statements.
There is less focused attention and concentration on screens, and thus less likelihood that errors will be caught.
|– Maryanne Wolf|
“Data shows that people who get these statements are not opening them and reviewing them,” Wu says. The NCLC and other organizations, she points out, have fought to have important consumer information – the minimum-payment table on the first page of card statements, for instance – added to credit card statements. “But if consumers aren’t looking at it\u2026” she says.
The NCLC was prompted to research the matter by what it sees as the credit card industry’s aggressive push to move consumers to e-statements. Wu’s research uncovered coercive tactics, including:
- “Action required,” when no action was required.
- Complicated click-throughs, rather than simple “yes” and “no” buttons, to continue receiving paper statements.
The Credit Card Accountability, Responsibility, and Disclosure Act, which took effect in February of 2010, requires credit card companies to provide paper statements to cardholders.
Paper must cover the digital divide
Wu’s research also uncovered another reason e-statements aren’t suitable for everyone: The digital divide, or lack of regular and reliable access to technology among some populations. One-third of all American households don’t have broadband Internet access, the report says, quoting a December 2015 Pew Research Center report. That figure jumps to 53 percent for consumers with less than a high-school education, and 59 percent for households with incomes below $20,000.
The digital divide shows up between different demographic populations as well as income brackets – about half the Hispanic population and 46 percent of African Americans lack broadband access, as does 55 percent of people age 65 and older. “We were concerned about vulnerable populations,” Wu says.
Even with access to the Internet, technology can and will break down; the clutter cleared by eliminating paper statements can cause an organizational headache if a laptop or cellphone dies. “Paper’s a lot easier to find,” Wu says.
Convenience of e-statements
Credit card companies, for their part, say they offer e-statements as a convenience for customers.
“It just gives customers another option, versus filling up their mailboxes with paper,” says John Taylor, president of First Electronic Bank in Sandy, Utah. First Electronic handles credit card business for Fry’s Electronics, a national chain of electronics stores based in San Jose, California. When consumers sign up for a Fry’s card, they automatically agree to e-statements. Paper statements cost $1 each, Taylor says. About half of Fry’s cardholders receive e-statements, Taylor says.
London-based HSBC Bank, which has more than 500,000 credit card holders in the United States, says about half are getting emailed statements, “and this number is constantly growing,” says Bunita Sawhney, head of customer value management, HSBC Bank USA. The bank is encouraging customers to migrate to e-statements; those who don’t like them can “easily” return to paper statements, Sawhney says.
Still, it’s tricky business. Even financial pros can slip up with e-mailed statements.
Jennifer Rodriguez uses her six credit cards so infrequently that over the past three years, she’s switched to emailed statements. Then, on Valentine’s Day, Rodriguez’s laptop stopped working. Two weeks later, she started having cellphone trouble and lost access to her e-statements.
Rodriguez, a Southern California education and outreach director for Springboard, found herself scrambling to remember and locate account numbers and passwords. “I had to try to find everything,” she says, then change passwords, and then had to wait for confirmation emails from all six card companies. “When you need to get to accounts quickly, every minute feels like forever,” Rodriguez says. As a result, she missed a payment on one card and ended up paying a late fee.
Even so, she plans to stick with emailed statements, for the time being. “I’m on the road a lot – e-statements are easier for me,” Rodriguez says. From now on, though, she’ll be more diligent about recording account numbers and passwords and storing that information in a safe, easy-to-access place. “Whatever tool you have, you have to be on top of it,” Rodriguez says.
See related: Video: Hoard or shred? Organizing financial records, Paperless ticket trend leaves unbanked outside the gate, For tax purposes, card statements aren’t detailed receipts, The problem with paperless: forgetting to pay