A blog from the Dow Jones Newswires at the Wall Street Journal certainly seems to think so. The post attempts to take the credit card industry to task over its supposedly non-consumer-friendly tactics in the wake of Credit CARD Act legislation. While the article raises valid concerns on the consumer’s behalf, data from credit card acquisition marketing in direct mail does not support the near-disaster scenario presented in the article. Would you like proof? Then proceed, gentle reader.

Blog: billing cycles are getting shorter
Comperemedia: nope
I’m not sorry to report that this is not the case. Acquisition direct mail in 2006 posted an average billing cycle of 22 days. So far in 2010, that average stands at 23 days, a gain for the consumer. In fact, half of the acquisition offers observed by Comperemedia so far this year disclosed a 25-day billing cycle.

Blog: more offers carry an annual fee
Comperemedia: yes, but…
It’s not as pervasive as the article would have you believe. In 2009, one in three offers for a new credit card disclosed an annual fee, compared to one of every five offers in 2006. The majority of those fee-based offers promoted a co-branded card, which traditionally carry annual fees, à la Delta SkyMiles card. The majority of offers sent to potential customers remain fee-free. Credit DEFCON 1? Not quite.

Blog: balance transfer and cash advance fees are increasing
Comperemedia: yes, but…
The blog was correct in indicating that both balance transfer and cash advance fees have increased. However, the industry average balance transfer and cash advance fees among acquisition direct mail remained under 4% in 2010 YTD (3.5% and 3.8%, respectively). While higher fees such as 4% and 5% are becoming more prevalent, not each and every consumer is being charged higher fees.

Blog: foreign exchange fees are increasing
Comperemedia: it may seem that way…
Foreign exchange fees are now required to be clearly disclosed per a legal settlement in 2007. The blog neglected to mention this change. Simply because the disclosures now appear does not alone mean that foreign exchange fees are on the rise. The industry standard is a 3% fee, which doesn’t appear to have changed recently. As long as consumers are aware of the fees they potentially face, they can make informed decisions about responsible credit usage.

Blog: minimum payment percentages are increasing
Comperemedia: nope
The blog mentions an increase in minimum payments from 1% to 2% to existing customers. Data among acquisition offers shows just the opposite. In 2006, the average minimum payment percentage disclosed on acquisition direct mail was 2.9%. That average in 2010 YTD stands at 1.0%. Customers can cry foul when their minimum payment is increased, however, those case-by-case decisions are not reflective of the issuers’ overall strategy or the industry as a whole.

Blog: new minimum payment percentages will increase fee revenue
Comperemedia: nope again
The way issuers can assess late fees has changed, as indicated in the article (late fees cannot be higher than the minimum payment). This could be a plan to increase late fee revenue as minimum payments increase. However, if the majority of offers to new prospects carry a 1% minimum payment requirement, down from a 2.9% average in 2006, this assertion doesn’t carry much weight.

All the blogger has done is point out tactics credit card issuers are taking to adjust their business strategies in a post CARD Act environment. The key to navigating credit card terms remain the same as before: common sense. Consumers have the means to become more credit-knowledgeable, thanks to required transparent disclosures and new products with built-in credit management tools such as Chase Slate with Blueprint. Prudent usage should be at the top of every credit consumer’s priority list. Penalty fees can only be assessed in cases of mismanagement. Falling behind in payments is a problem when consumers take on more than they’re able to manage. Issuers know that they cannot alienate loyal customers, nor can they effectively target new customers with a barrage of seemingly high fees. A certain amount of offer remodeling was inevitable in the face of regulation. Credit issuers are in the business of making money; as consumers learn the new rules, they’re on better footing to play the credit game.

Am I an advocate for the credit industry or for the consumers? Neither. I am an analyst making the most of the data that is available to me. Despite my curious nature, I am not privy to each and every decision credit issuers make. However, I do know what the data before me indicates. At least in the credit card acquisition space, the data shows that not everything is all doom and gloom – yet. Watch this space, readers, if the clouds do indeed gather, I will chime in.

The original blog posting can be seen here: http://chicagobreakingbusiness.com/2010/11/more-credit-card-fees-ahead.html

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