Credit-card companies are waiting until the last minute to start applying payments to balances with the highest interest rates first, said Peter Pham, chief executive officer of BillShrink.
“No lender is doing it yet,” said Pham, of the part of the credit-card reform law taking effect next month. “That will be the biggest impact across the board.”
BillShrink.com, which compares pricing and terms offered to consumers for about 167 credit cards, has been tracking which issuers are complying with the Credit Card Accountability, Responsibility and Disclosure Act of 2009, Pham said in an interview today at Bloomberg headquarters in New York.
President Barack Obama signed the legislation last May designed to protect consumers from certain changes to card terms. Many of the provisions take effect Feb. 22. The law generally prohibits abrupt rate increases, requires cardholder consent before charging fees for transactions that exceed credit limits and makes issuers apply payments to balances with the highest interest rates first.
Companies are already complying with the first parts of the law, Pham said, which took effect last August, giving consumers the right to reject rate increases within 45 days and pay off balances at the current rate. Card issuers also began mailing bills 21 days before the due date, up from 14 previously. Remaining provisions are scheduled to go into effect Aug. 22.
BillShrink, which started in 2008, allows consumers to compare credit cards, mobile phones, savings accounts and gasoline. The Redwood City, Calif.-based company will begin tracking similar data for small businesses.
More data, less voice
Among mobile-phone carriers, “the trend is to charge more for data and less for voice,” Pham, 34, said. This year more carriers may offer plans without a contract, he said, and the Federal Communications Commission may look to restrict “exorbitant termination fees” for exiting a mobile-phone contract.
BillShrink generates revenue through payments from retailers when any of the site's 1 million users switch credit cards or cell-phone providers, according to the company.