CFPB Issues Warning on Deceptive Credit Card Marketing

September 3, 2014, Written By John H. Oldshue
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Today, the Consumer Financial Protection Bureau issued a warning to credit card companies about deceptive marketing tactics used to promote convenience checks and reduced or zero percent interest offers.

The Bureau told banks to properly disclose the costs of these promotional offers and what would cause the reduced rates to cease. Banks that do not disclose these conditions may be cited for deceptive practices.

“Credit card offers that lure in consumers and then hit them with surprise charges are against the law,” said CFPB Director Richard Cordray in a statement. “Before they sign up, consumers need to understand the true cost of these promotions. Today, we are putting credit card companies on notice that we expect them to clearly disclose how these promotional offers apply to consumers so that they can make informed choices about their credit card use.”

The CFPB also issued consumers some tips to avoid interest charges and fees on low introductory rate credit cards and other promotional offers:

  1. To avoid surprise charges, make payments on time. Consumers are advised to pay off the entire balance before the end of the promotional period.
  2. Don’t make new purchases with the new card until you pay off the entire balance. Make any new transactions with cash, a debit card or another balance-free credit card in order to avoid interest charges on these new purchases.
  3. Compare interest rates on credit cards before applying for a new card.

A year ago, the CFPB highlighted some concerns on how well consumers understood the grace period of credit cards. In the CARD Act Report, the Bureau raised questions on whether the disclosures were adequate.

Consumers can submit credit card complaints directly to the CFPB on its website.

When deciding on whether to transfer a balance from one credit card to another, here are some quick factors to keep in mind from LowCards.com:

  • You may be assessed a balance transfer fee. This is different from the credit card’s APR. Most balance transfer fees are 3%, which could quickly increase the debt you have. It can also be a significant fee depending on the amount of money you transfer from one card to another. There are some cards, like Chase Slate, which do not have a balance transfer fee.
  • Your credit score may drop. Any new credit account that you open could lower your score a bit, but that shouldn’t last long if you make consistent and timely payments.
  • Your introductory rate will not last forever. In most cases, your APR will increase after a certain period of time. Be prepared to pay off your full balance during that introductory period.
  • Your new card’s credit limit may not cover all of your existing debt. In that case, you have to decide whether it is worth the potential fees to transfer just a portion of the debt to the new card.


The information contained within this article was accurate as of September 3, 2014. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.