Americans warming to credit-card companies

November 20, 2011 at 12:00a.m.

Things are looking rosier for credit-card holders. Consumers are paying down balances and facing fewer punitive actions by credit-card companies, such as higher rates, late-payment fees and canceled cards, according to a nationwide survey by the Consumer Reports National Research Center.

New federal rules barring many abusive practices by credit-card issuers seem to be having an effect: Only 12 percent of Americans said their credit-card companies had generally treated them unfairly, according to Consumer Reports’ nationwide survey, down from 15 percent in 2010, and 22 percent in 2009.

And more people are being approved: Only 14 percent were denied a card in 2011, compared with 24 percent last year.

But that doesn’t mean consumers should let their guard down: Thirty-five percent of survey respondents said in the past year they had experienced at least one credit-card problem, such as a new annual fee, higher interest rate, lower credit limit or limits on rewards.

Average interest rates on new cards were 14.11 percent in September, up from 11.64 percent in May 2009, according to LowCards.com, a card-comparison site.

With the protections of the 2009 Credit CARD Act in full effect, the survey shows a slightly lower level of dissatisfaction among Americans with their credit cards than last year.

However, credit cards remain one of the lowest-rated services CR has ever analyzed; only 51 percent of respondents indicated they were highly satisfied with their cards.

The survey, conducted in July by the Consumer Reports National Research Center, also shows that consumers are carrying less credit-card debt, with median balances of $3,414, down from $3,793 in 2010.

ATTRACTIVE OFFERS

With reports of delinquencies and defaults down, card issuers have resumed stuffing your mailbox with offers, many of them featuring low-rate introductory deals or lucrative rewards.

If you’re among the 56 percent of Americans who pay off their card balances each month, you might want to take advantage of offers promising introductory bonuses of cash, miles, or points. The best rewards-card deals are reserved for people with credit scores of 730 and up.

If you regularly carry a balance, a rewards card probably won’t be a good fit, since they tend to have higher interest rates than standard cards, and you might pay more in finance charges than you would gain in rewards.

PICK THE RIGHT CARD FOR YOUR HABITS

The best card for consumers depends on whether they pay their balances in full each month, and, if so, what types of rewards they’re looking for. CR surveyed the marketplace and found the following enticing deals. Cards are listed in alphabetical order.

Cash-back cards (Higher APRs make these cards most suitable for people who pay off balances in full each month): American Express Blue Cash Everyday, Capital One Cash, Chase Freedom, Fidelity Rewards American Express and PenFed Platinum Cash Rewards (available to members of the Pentagon Federal Credit Union).

Travel cards (These cards offer excellent rewards for frequent travelers): Capital One Venture Rewards, Chase Sapphire Preferred and PenFed Premium Travel Rewards American Express.

Low-interest cards (For consumers who carry a balance or want to transfer a balance): Iberia Bank Visa Classic, PenFed Promise Visa and Simmons First Visa Platinum.