SILVER SPRING, Md. (TheStreet) — Citigroup (C) (Stock Quote: C), Bank of America (BAC) (Stock Quote: BAC), JPMorgan Chase (JPM) (Stock Quote: JPM) and Capital One (COF) (Stock Quote: COF) serve a smaller number of credit-card customers who pay the minimum account balance after the CARD Act took effect.
Most banks raised interest rates before the CARD Act took hold Feb. 22, offsetting more stringent regulations designed to protect consumers. But Citigroup, Bank of America and other card companies were required to tell their customers how long it would take to pay off the balance with the minimum payment.
(C) (BAC) (JPM) (COF) In an online poll of 2,000 credit-card customers about the effects of the CARD Act, the National Foundation of Credit Counselors found that 25% pay a bigger chunk of their monthly credit-card balance than they did three months ago. A total of 55% are paying only as much as much as they can afford — same as they ever were — while 12% pay off the balance in full.
"It appears from where we sit to have achieved its intended effect," says Gail Cunningham, vice president of public relations at the National Foundation for Credit Counseling in Silver Spring, Md.
(C) (BAC) (JPM) (COF) Twelve percent of respondents said they've reached out for help from credit-card counseling agencies, whose contact information is now required to be listed on statements. A customer's most common reason to call a credit-counseling agency is a reduction of income. Before the recession, the most common reason was "bad money management."
CARD Act-related rule changes mean that paying more than the minimum balance is more cost-effective than ever. The Center for Responsible Learning recently reported that paying more than the minimum could save a customer as much as two dollars for every dollar paid. The report detailed a scenario in which a consumer carried a balance for purchases and cash advances, the latter of which are assessed at higher rates. Before the CARD Act, the report said, paying $100 more than the minimum balance could save a customer $164 in interest charges. Savings now could amount to $224.