On July 21, the new Consumer Financial Protection Bureau opened its doors for business, and at the same time launched a portal (via a call center and snail mail as well as online) through which consumers could complain about their credit card companies. In spite of that launch being reported on the IndexCreditCards.com news blog, some people may remain ignorant of the service’s existence, a possibility that might appear likely given that it received only 5,074 complaints up to Nov. 15.

Top credit card complaints

The CFPB broke down complaints into 33 categories (including one called “other”), so it gives us a chance to see the things about credit card companies that bother people most. Perhaps surprisingly, only three of these each made up over 10 percent of the total:

1. Billing disputes: 13.4 percent
2. Credit card rates: 11.0 percent
3. Identity theft/fraud/embezzlement: 10.8 percent

The fourth largest category was that “other” one, and no other (other than “other”) accounted for more than 4.4 percent of all complaints. One interesting observation is the low levels at which the three fee-related categories (late fee, overlimit fee and other fee) appear. When you add them all together, they make up less than 8 percent of all complaints. Before the Credit Card Act was implemented, you might have expected the ultra-high penalty fees that issuers used to charge to have topped the list.

Credit card interest rates

At first sight, consumers’ beefs with credit card rates seem strange. We all know what rates we have to pay on our cards, so what’s the problem? Unfortunately, the CFPB doesn’t provide an answer, but it may be that penalty rates are the issue. These can be triggered by late payments, and often result in a doubling of the APR that a consumer is used to paying. You can see someone being outraged if such a hike were to be imposed (and one usually would be) after they’d provided their credit card issuer with a perfectly reasonable and innocent explanation for a one-off slip.

Of course, credit card interest rates could easily become an increasingly common cause of complaint in the future. Most credit cards today have variable rates, and when these eventually begin to climb–and some believe they might do so steeply once the economy gets fully back on its feet–then many who carry forward significant balances could well find themselves suffering real pain.

Balance transfer credit cards

It was encouraging to see that only 83 complaints (1.7 percent of the total) were received concerning balance transfer credit cards or balance transfer fees. Many see these as important tools that can help them head off financial problems before they get too serious, so it’s important they work well.

However, you have to recognize the limitations of the data. If only 83 balance transfer credit cards were to have been issued during the period the figures covered (an incredibly unlikely scenario) then that would mean that every one of them was a cause of complaint. The thing is, we don’t know how many were issued, so we can’t make more than intelligent guesses about how well they’re performing for cardholders.

There is another weakness in the CFPB report: it provides only a snapshot of the period covered. Of course, that’s inevitable for the first data from any tracking study. What will be even more interesting in the future is to watch trends develop. The CFPB, the credit card companies, and you as a cardholder should then be able to identify problem areas of the business as they emerge, and address them. So, for example, you might one day see that complaints concerning cash advance fees have suddenly jumped (they account for only 0.3 percent in the current report), and that might prompt you to check whether your issuers have bumped up their fees recently and, if so, consider switching to a different card.

A truly free market can only exist when all parties have access to full, accurate and timely information. Anything that improves the flow of knowledge, even imperfectly, should surely be welcomed. The CFPB is surely a step in the right direction.

Published 12/06/11 (Modified 04/20/12)