Only 3% of Consumers Read Their Bank Mail?

On Friday, January 29th, I made a CARD Act presentation at the Federal Reserve Bank of Atlanta. One of the CARD Act provisions requires that credit card issuers notify their cardholders at least 45 days in advance if the terms of their account are going to change adversely. Specifically, cardholders must be notified if their interest rate will increase or if an annual fee will be implemented.

My hypothesis is that the notice is irrelevant, because most consumers don't read the mail that comes from their credit card issuers unless it's their statement. And since I had 100 people in the room, I felt it was time to test my theory. I asked the crowd, "How many of you read the non-statement mail (what some consider to be junkmail) you get from your credit card issuers?" Three people initially raised their hands. After a few seconds a fourth raised his hand. I'm calling his pause my “"margin of error."

So, there you have it. It's very possible that only three percent of the population reads the notices from their credit card issuers. Now, I recognize this is a bold and empirically unstable statement, but I have reason to believe it's actually inflated. The people in the room were all bankers, financial counselors, finance professors, or otherwise deep in the finance industry. I would expect the percentage from that group to be much higher than a more reasonable cross section of the population. So three percent might actually be on the high end.

Either way, I still believe the 45-day notice provision is the most meaningless of all the CARD Act provisions. And now I have proof, albeit "kind of" proof.

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.

Comments

[Kelly]

When notices are put in the envelope with the statement, and at a quick glance the notice is indistinguishable from the ads - you are correct. The solution is simple - all notices of change of terms should be on the statement itself. That would provide meaningful notice to the person who is affected by the term change and can decide what to do. But if the card companies are not required to put the notice on the statement - that rule it is meaningless.

[JohnUlzheimer]

I really think people dont read their statements that closely either
other than a cursory review of their charges, minimum payment amount,
balance and due date.

Besides, I dont think these notices will be stuffed in a statement. I
think theyll be sent as one of letters. Heres why...what if Johns
Bank decides today that I want to raise your rate but your statement
isnt due to go out for another 2 or 3 weeks? Then essentially Id be
giving you 45 days plus the 2 or 3 weeks. You cant say your rate will
be increased 45 days from 2 or 3 weeks ago.

Am I crazy?

-------- Original Message --------
Subject: [CreditBloggers] Kelly submitted a comment to Only 3% of
Consumers Read Their Bank Mail?

[Fran Downey]

John, you are right. I was at the Fed last Friday for your presentation. Good job by the way. I am in the 97% group that doesn't read the "jumk" mail. I read my statements and if I saw the rate jumped from say 10% to 20% I'd be on the phone fast.

[Marie]

I skim my credit card notices, but I don't read them in detail because I check my account 4-7 times a week and pay my bill in full every 1-2 weeks. I never carry a balance or take cash advances. So most of the things in there do not apply to me, and those that did I would notice very quickly.

[Terrance Leeders]

This is truly amazing. I would say over 50% of my clients don't have any idea as to what interest rate they are paying...let alone know what interest rate their house or car's have. When I show them how much it adds up to, they suddenly realize why they have so much consumer debt!

[Evelyn]

I work for a large credit card company in the collections department. I have done collections for over 15 years and when I ask the cardholders about reading their cardholder agreement not one has EVER said they have read it. So...the people who do not read the agreement might be the ones who get into trouble...and the ones who do read it...don't.