San Diego, CA - "The growth
of consumer credit and indebtedness has been explosive
over the past ten years. Still, relatively few Americans
bother to read over their credit card agreements when they
first sign up perhaps missing important clauses such as
'universal default' and any limits on how long a low-ball
interest rate might last. Now, according to a new survey
conducted earlier this year by Auriemma Consulting Group (ACG)
of Westbury, NY, cardholders pay even less attention to
changes in their cardholder agreements.
"Credit card issuers have long known about this fact, but
never talk about it," said Paul Richard, a registered
financial consultant (RFC) and the Executive Director of
the award winning, nonprofit Institute of Consumer
Financial Education (ICFE) based in San Diego, CA. The
ICFE is dedicated to helping consumers become better
spenders, regular savers and wise users of credit.
In telephone interviews with some 832 consumers who use
one card most frequently, ACG reported that only about a
third were aware that their card had been repriced or had
their terms modified. About 60 percent said no and another
eight percent indicated they didn't know.
Among the 272 respondents who said their terms or pricing
had changed, 57 percent said the changes did not change
their opinion of their issuer. Among the 42 percent,
however, who said there was an impact, 60 percent of them
reported a change in their opinion of the issuer for the
worse and 36 percent said it was better.
"We didn't specifically ask what was the cause or reason
for the repricing," said ACG's C. Scott Strumello. "I
would say in the majority of cases when you're getting a
change in terms.. the terms are seldom in the
cardholder's favor," he added.
Strumello says because that well over half of the
repsondents had no change in their opinion of the issuer
after a change in terms probably indicates that many
people don't read the issuers notice or understand it. The
reasons for that may include the legalese of notices and
the difficulty of assessing the importance or degree of
the change unless the new notices is read in conjunction
with earlier cardholder agreements or change-of-term
notices, Strumello explained.
"Unless their APR is going up by a dramatic amount, it's
not something they notice until much, much later,"
Strumello said, adding "Those who transfer balances seem
to have the best recall of terms or changes in their card
pricing." No group surpassed 50 percent in the awareness
category. Of college grads and heavy card users 38 percent
were aware of changes, light card users, non-balance
transfers and non college grads were all under 30 percent
awareness.
For more information about a credit term changes and
universal default, visit the ICFE's Web page at:
http://www.icfe.info OR
contact Paul Richard, RFC at 619-239-1401. To receive the
same information by mail, please send $1 and a
self-addressed, 60 cent stamped envelope to: ICFE, Credit
Report Review,, PO Box 34070, San Diego, CA 92163-4070.