Consumers who expected credit cards to be easier to obtain and cheaper to use , now that the Federal Reserve Board has lifted the credit restraints imposed in March, may be in for some unpleasant surprises.
During the months ahead, consumers are expected to find costs of credit still high, with cards still difficult to obtain. Moreover, national retail institutions that rely heavily on credit sales are not going to find a sudden resurgence of credit card use at their cash registers. There are several reasons for this:
* Credit costs: In many states, interest charges on credit cards have been increased, often through legislative action. According to legal analysts here, a few of these costs are expected to be trimmed back to their pre-March levels in the months ahead.
* Specia charges: Many banks are posting special assessments on cards, such as a $10 to $25 annual "membership" cost. While some banks are removing them, these fees are expected to stay in place for large numbers of institutions.
* Tougher standards: One immediate effect of credit tightening was for many banking institutions to phase out more-marginal accounts -- credit cards with particularly low lines of credit, such as $300 or less. Now, there is concern on the part of consumer groups that these more marginal card users -- many of them low-income families and members of minority groups -- may not be able to get back their credit lines with the lifting of controls.
It is felt here that many banks have been eager for some time now to reduce the numbers of lower-income families using credit, since it it this "pool" of card users that has traditionally provided the largest percentage of delinquent and uncollectable accounts.
In addition, the consumer lobby here -- groups such as the powerful Consumer Federation of America -- which have fought over the years for greater disclosure of credit terms, as well as lower credit charges and greater marketplace "equity" for lower-income people seeking credit, are believed to have been somewhat politically "disadvantaged" vis-a-vis the equally powerful (and more financially well-armed) banking groups, such as the American Bankers Association.
The reason is that during the period of the "credit crunch" the banking institutions were able to capture the public attention as the most directly injured "victims" of spiraling inflation and interest charges. Thus, in state legislatures, in particular, lawmakers were willing to turn their attention away from seeking the redress of consumers to granting special concessions to bankers.
One yet unanswered question is whether the lifting of the controls will quickly boost retail sales.
Credit sales make up 60 percent or more of sales for large national chains like Sears, Roebuck & Co., the nation's largest retailer, and Montgomery Ward & Co.
According to spokesman for both Sears and Ward's, no sudden resurgence of consumer credit usage is expected. A Ward's spokesman, for example, argues that credit sales will not likely improve much for the company until later this year, or early in 1981, as the nation presumably begins to emerge from the current recession.
Still, most banking officials, as well as government economists, argue that definite benefits -- to the economy and thus the public -- have resulted from the short-lived credit program.
Attaining those benefits was not without some hardship: Retail sales for the period from February through May plunged sharply -- down 7.3 percent, according to the Commerce Department. That was more than twice the 3.1 percent decline in the recession- ary period from September through December 1974.
And for the overheated US economy, the result was to exacerbate the recession , since consumer spending had in fact been dropping off even before the credit curbs. But that plunge in turn helped to ease overall interest rates.
For consumers, the credit tightening has meant a slight dropoff in installment debt. During April alone, installment debt dropped almost $2 billion.