Banks Struggle with Credit Card Clarity

How important is it to read the fine print on your next credit card application? It all depends on the credit card you want. A recent study by CardHub.com ranked the top 10 credit card providers based on how upfront they were with their policy information and found that, while some are improving, other issuers are still burying essential information in the fine print.

Capital One (Stock Quote: COF)  and Bank of America (Stock Quote: BAC) ranked the highest in terms of clarity, with scores of 96.4% and 95%. The worst performing issuer was U.S. Bank, which scored only 59.3%.

CardHub evaluated online applications for, when available, two rewards credit cards and two non-rewards credit cards from each provider. The cards received points on a scale of 1 through 10 based on clarity in four categories:

  • How you earn and use reward points.
  • How much you pay in annual fees.
  • The costs to carry a balance for new purchases.
  • The costs of making a balance transfer.

Points were based on how visible this information was within the page, whether applicants had to click to a new page to find pricing information and whether or not they had to read the fine print to find these key components.

The 10 issuers ranked as follows:

  • Capital One: 96.4%
  • Bank of America: 95%
  • Wells Fargo: 87.9%
  • HSBC/Orchard Bank: 86%
  • Discover: 82.5%
  • Citi: 82.1%
  • Chase: 81.4%
  • American Express: 78.3%
  • USAA: 77.5%
  • U.S. Bank: 59.3%

The lowest-ranked U.S. Bank received 83 points out of a possible 140, losing points on all four evaluated cards in three of the categories. While it adequately explained its rewards programs, information regarding annual fees, balance fees and transfer fees could not be accessed unless a consumer clicked “Apply Now” and went to an additional “terms and conditions” page.

The highest-ranked issuer, Capital One, received 135 points out of a possible 140. The five points the company lost was due to not explaining the value associated with rewards points earned through its Orbitz® Visa® Platinum Credit Card.

Consumers can check for a full breakdown on how points were awarded to each issuer. CardHub acknowledged the new study shows improvement on how credit providers communicate with customers.

These results follow an earlier CardHub study in which six out of 10 credit card issuers received “poor” to “fair” ratings on penalty annual percentage rate policies following the Credit Card Accountability, Responsibility and Disclosure Act of 2009.

“The study found that ambiguous language and phrases such as ‘up to’ and ‘as low as’ still exist in credit card applications, although this has diminished considerably,” Cardhub explained.”Most applications were very clear about the annual fee and how to earn rewards.”

Banks may have made improvements to the language on their credit card applications, but how are they communicating the mandated changes to their overdraft policies? Find out in this MainStreet article “Banks Push Pricey Overdraft Plans.”

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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