by Joseph Kenny | 02/11/10

The same credit card companies that raised interest rates and fees on credit cards in advance of the new Credit CARD Act are now trying to improve their image with consumers. The credit card companies have been under review, and some say attack, as consumers demanded the government put a stop to practices that kept consumers in debt.

The new Credit Card Accountability and Responsibility Act (CARD) was passed by Congress to limit when and how fees and interest rates are added and raised, and since then fees have been regularly added to accounts before the February 22, 2010 implementation date.

Now the credit card industry seems to have decided it needs to change course. Instead of encouraging consumers to go deeper into debt, there is a push on to help consumers manage their debt responsibility. Some of this change of heart is sure to be related to fears that credit card company revenues are going to drop as fees and interest rate increases are limited. But whatever the reason, some consumers are in for a surprise as their credit card companies introduce new programs meant to help them manage debt wisely rather than running up account balances with high interest rates.

In fact, credit card companies seem to have adopted a new marketing approach meant to convince customers the companies are financial partners and not just credit issuers. This attempt to mitigate consumer resentment and anger towards the credit card companies and the banking industry in general coincides with credit card charge-offs rising to 10.7 percent in December 2009. That was according to Fitch Ratings.

Consumers are now saving at a 5 percent rate. This is the highest rate seen over a ten year period. Before the recession started the savings rate was at approximately 1 percent. During the recession the credit card companies experienced a 5 percent delinquent rate on accounts. Fitch Ratings estimated that the credit card businesses lost as much as $20 billion in the third quarter of 2009.

Naturally the credit card companies would rather customers make timely payments and remain solvent. It doesn’t do the credit card company any good for customers to stop making payments forcing charge-offs of accounts. That is why the credit card companies took a hard look at the current trends in government and among consumers and are slowly but surely getting on board.

The new programs are just emerging so there are not a lot of details yet. But consumers can certainly expect to see new products and offers included with the financial advice. The goal will be to save money over the long run and to keep payments current.

In the end though, being financial responsible means understanding exactly what you are agreeing to when accepting a credit card and using the card wisely. Everyone needs to do the math and calculate how the real interest rate and fees will impact your ability to repay the balance in a reasonable amount of time. The credit card companies are not in business to offer charity and will find ways to restore lost revenue.