Credit Card Issuers Introduce Cards With Simpler Terms

By Nancy Trejos
Washington Post Staff Writer
Wednesday, September 16, 2009; 11:35 PM

Credit card agreements have become increasingly complicated over the years, forcing Congress to pass a new law in May that would restrict banks' ability to modify rates and fees on a whim.

The new rules don't take effect until February, but even before then, some issuers are doing an about-face, introducing cards intended to make it easier for consumers to handle their debt.

On Wednesday night, Bank of America announced that starting in October, consumers will be able to apply for its BankAmericard Basic Visa card. The new card offers one basic rate for all types of transactions, including balance transfers and cash advances that typically have higher rates than purchases. That rate -- the U.S. prime rate plus 14 percentage points -- fluctuates with changes in the prime rate. Additionally, there would be no fee for going over the limit, and a flat late charge of $39.

"Consumers are looking for simple and straightforward solutions," said Brian Moynihan, president of global consumer and small business at the bank. "We want our customers to have offerings that are predictable, easy to understand, and will help them through challenging times and beyond."

Earlier this week, Chase introduced its Blueprint card, which is designed to help borrowers pay down their balances more quickly. Cardholders can decide which expenses they pay off in full each month, be they groceries or gas, even while accruing interest on other purchases. For items not paid off right away, the borrowers can set a target date for doing so, allowing Chase to calculate a monthly payment that will get them to that point.

"Consumers want more control, simplicity and predictability when it comes to their finances," said Gordon Smith, chief executive of Chase Card Services. "With Blueprint, customers can design their own plan to pay off balances sooner, save money by avoiding interest charges, and then easily track progress toward achieving their financial goals."

Credit card experts said that issuers are clearly trying to improve their image after months of defending themselves for raising interest rates and cutting credit lines for even their most credit-worthy customers. Consumers have been increasingly turning away from their credit cards, partly because of card issuers' tighter policies. Revolving credit, mainly credit card debt that consumers don't pay off in full each month, fell $6.1 billion in July, according to the Federal Reserve.

"There's obviously this PR volleying going on," said Curtis Arnold, founder of, which compares credit cards. "It's stiff competition in terms of trying to regain consumer trust and trying to regain loyalty among cardholders."

At the same time, experts said, the new cards could benefit consumers -- and ultimately, the card companies.

"I think the trend there is, 'We as a credit card industry are trying our best to reinvent ourselves, not do business as usual and at least give the appearance of being more consumer-friendly and more consumer-focused,' " Arnold said.

But consumer advocates say it's not yet time for borrowers to rejoice. The card issuers themselves have said that the new credit card rules will ultimately force them to raise rates across the board because it will be harder for them to properly manage risk.

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