A majority of consumers are aware that Congress passed credit card protections last year, but fewer know what those protections actually are, according to survey conducted jointly by CUNA and the Consumer Federation of America.
Opinion Research Corp. conducted a survey of 1,013 adults Jan. 28-31. The survey's margin of error is three percentage points.
The survey found that while a majority of consumers (61%) knew that Congress passed consumer protection laws last year, 65% of consumers surveyed did not know that they take effect on Feb. 22 or what the protections actually prohibit.
"We are especially concerned that some consumers will base their future credit card use on protections that don't exist," said CFA Executive Director Stephen Brobeck. He noted, for example, that 36% of credit card users incorrectly believe that the new law caps late fees at $35, while 31% believe it caps interest rates at 20%. On the positive side, the survey found that consumers were more aware of their card terms and, when they find them to be disadvantageous, were prepared to take steps to remediate the situation.
"We are encouraged that 85% of consumers reported planning or taking action when aware of a rate hike, new fee, lower credit limit, fewer rewards or other disadvantageous terms," said CUNA Chief Economist Bill Hampel.
While the survey found that 61% of consumers and 70% of card users were aware that a card protection law had been passed and signed into law, the knowledge was not uniform. Both younger consumers and lower income consumers were less aware of the change. The survey also found that there is a good deal of misapprehension about what the protections actually do.
The survey asked consumers aware of the new law whether each of six protections is part of the law. Even among the 61% of those aware of the new law, there was low awareness. Less than half, for example, are aware of two new protections that were considered key to the card reform effort. They are requiring credit card companies to apply monthly payments first to the higher interest rate debt that may be owed (44%) and prohibiting over-the-limit fees without specific consumer authorization of over-the-limit transactions (42%).
In addition, many consumers surveyed reported protections that are not actually in the new law. For example, the survey reported that 42% of consumers surveyed think that the law prohibits interest rate hikes on one card because of another card's payment history. while 37% think late fees are capped at $35 and 30% think interest rates are capped at 20%.
But when cardholders were aware of the new card law, they also tended to be more aware of their card terms and how card issuers were changing them. Half of the consumers surveyed reported noticing some type of recent change in terms by the card issuer.