A trio of related credit card news items suggests that consumers could be setting themselves up for a new cycle of debt. While outstanding consumer debt has dropped, at least one card issuer is making it easier for card holders to increase their use of credit. Meanwhile, newly released data from the Consumer Financial Protection Bureau shows that despite the Credit CARD Act, many consumers still find credit card terms and rates confusing.

Consumer debt drops

The New York Federal Reserve Bank revealed that in the third quarter of this year, Americans lowered the outstanding debt they carried by $60 million. In the second quarter of the year the outstanding debt was $11.72 trillion; in the third quarter it had dropped to $11.66 trillion. While mortgage balances were a significant part of the decline, 6 million credit card accounts were closed during the period and borrowing limits were also down.

But Chase ups credit limits for some customers

While the Federal Reserve Bank claims limits were down, card issuer Chase notified certain Freedom MasterCard members that their credit limits were being changed to "credit access lines," according to a story in the Los Angeles Times. The Times reports that credit access lines allow customers to charge over their credit limit without any over-limit fees. The credit access line has limitations, Chase spokesman Paul Hartwick told the Times, but it is designed to encourage Chase customers to do more of their spending with the Freedom MasterCard. Not all Freedom card holders will receive the new terms, but those who do can opt out of the new terms.


Confusion over credit card terms was a "sizable minority" of the more than 5,000 complaints received by the Consumer Financial Protection Bureau from July to October, according to the Huffington Post, despite the changes put in place by the Credit CARD Act in February 2010. The purpose of the Credit CARD Act was to clear up confusion for consumers regarding interest rates, the story notes, yet 24 percent of the complaints received were regarding interest rates and billing disputes.