Survey: Consumers give high marks to credit union-issued cards

NEW YORK (9/4/07)—When it comes to credit cards, service and low fees matter most, according to a survey released last week by Consumer Reports (CNNMoney.com Aug. 31).

More than 36,000 cardholders ranked the best and worst cards. Credit unions fared exceptionally well, with survey respondents putting credit union-issued cards in the top tier.

At the top of the list was USAA Federal Savings, followed by Navy Federal Credit Union and other credit unions. Cardholders ranked five of the largest MasterCard and Visa issuers as mediocre, citing headaches and other problems with JPMorgan Chase, Bank of America, Citibank, Capital One, and HSBC. Together, these issuers control roughly 80% of the credit card market.

Interest rate matters: The top three issuers charged interest rates between 9% and 11%, with the lowest-ranked issuers charging 17%.

Stick with issuers that have a reputation for good service and low fees, and pay attention to your own credit card habits:

• Watch for rate increases. About one-quarter of survey respondents reported that their interest rate jumped to more than 25% because of a universal default clause, which allows an issuer to bump up your rate if you pay late on other accounts in your name—your mortgage, car loan, or other credit cards. If you see an unexpected interest rate increase, check it out.
• Pay on time. Late payment penalties more than doubled in the past 12 years. The average fee is now $28, up from $13 in 1995. The survey reported fees as high as $39.
• Demand prompt customer support. Cardholders gave high marks to USAA Federal Savings and to credit unions for customer service and access to representatives. Survey respondents cited several problems attributed to issuers in the lowest tier: unreasonable waits, difficulty navigating voice systems, and having to make multiple calls to speak to representatives.

For more information, read "Credit Cards: Switch and Save" in Home & Family Finance Resource Center.