Is Your Credit Card Application Really What It Seems?


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Transparency.  It’s a buzzword that was thrown around a lot in the context of politics and finance, both corporate and personal, during the financial downturn that led to the Great Recession.  It was something our government, board rooms and banks were all short on.  It was also something that was said to be radically improved—at least in the credit card space—by the CARD Act, the financial reform law that took effect in February 2010.  But did transparency really improve, or are things still not what meets the eye?

According to Card Hub’s 2011 Credit Card Application Study, transparency in the credit card industry has, in fact, gotten better.  

This study evaluated the 10 largest credit card companies in the U.S., based on how clearly they listed key account terms on their online credit card applications.  Issuers were then given scores on their clarity in terms of rewards, annual fees and the costs of both carrying and transferring balances.  The question this study ultimately sought to answer:  Can people actually figure out what they’re getting from a given card without painstakingly reading the endless fine print?

The results were as follows:

  • Like in 2010, Capital One and Bank of America placed first and second, respectively, in terms of transparency
  • Capital One, BofA, Chase and U.S. Bank all scored above 90%
  • Every issuer scored above 80%
  • U.S. Bank showed the biggest improvement, increasing its score by 32.1 percentage points and climbing from 10th to 4th in the rankings
  • While Discover and Citi saw their scores remain unchanged between 2010 and 2011, improvement by competitors caused their rankings to fall from 5th to 9th and 6th to 10th, respectively


At the end of the day, you have to remember that a credit card agreement is a contract and should therefore be read with some care.  Still, the fact of the matter is that most people have neither the time nor the patience to thoroughly read these pages-long documents, and credit card companies know it.  

In the pre-recession credit card market, most issuers used this to their advantage, clearly advertising teaser terms and burying language in the fine print that gave them the right to increase interest rates for any reason and at any point in time.  This led to growing consumer distrust for credit cards in general.

Now, however, things appear to be looking up.  While the 2011 Application Study found that credit card companies need to do a better job of informing prospective customers about balance transfer fees and how to redeem rewards, the majority of applications were clear about annual fees, purchase APRs and how to earn rewards.  What’s more, consumers have new legally binding rights, and it appears that most major issuers have caught onto the fact that self-policing and doing the right thing are the only ways to stave off additional regulation.  We should therefore be encouraged by the results of Card Hub’s study.

This article was written by Odysseas Papadimitriou, CEO of Card Hub, a leading marketplace for credit card offers, including those for credit cards for new businesses and credit cards with no annual fee.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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