Nielsen BuzzMetrics reviewed 8,000 discussion forums, 45,000 Usenet forums and more than 135 million blogs to gauge consumers’ thoughts on this law, with particular focus on the following issues:

• How are consumers reacting?
• How are card companies communicating changes?
• What actions do consumers plan to take?
• Who is to blame?
• Which companies are being implicated?

Online buzz spiked at the end of May 2009 as Congress passed the Credit CARD Act, and then tapered off until the end of February 2010, when the law went into effect.  Overall, however, this discussion about this issue paled in comparison to the rancorous health care reform debate, which took center stage for much of 2009.

Almost immediately upon the President’s signing the bill into law, online sentiment began to turn against it.  A USA Today post on the law received more than 600 comments – most of them quite negative.  Many people thought that the legislation did not go far enough in protecting consumers, while others felt the new law penalized those who were responsible credit users.  Meanwhile, there was widespread belief that card issuers would find loopholes for raising fees and interest rates prior to the law’s enactment.

Overall, consumers seem concerned about how the law changes the use and availability of credit.  They said that their credit issuers communicated with them primarily through statements or via a web site.  A fair number of people went online to search for information about the law and how it might affect them.  Financial and political web sites were the top destinations for online discussions, and searches on Google and other engines are being actively used by consumers to learn more about the law.  So what actions might consumers take in response to this law? Switching to cash or debit cards was the top action, followed by canceling credit cards.

“It was a little surprising to see the widespread negative or ambivalent consumer sentiment towards the credit card reform law.  What was initially hailed as an important step in protecting consumer rights quickly turned into an exercise of public mistrust of both financial service companies and the government.  As we have seen with the health care reform debate, many Americans think that companies will find ways around the law and find new sources of revenue,” said Ron Coyle, Lead Analyst at Nielsen BuzzMetrics.  “Now that the law is in effect, buzz about the topic will likely quiet down.  But it will be interesting to see how consumer sentiment about this law changes.”

“If the overall worth of IRA and 401K accounts continues to decrease, perhaps there is an opportunity for financial institutions to place more of an emphasis on CDs as a way to help consumers save with some guaranteed interest rate during these trying financial times,” said Jane Crossan, Vice President, Practice Leader for Nielsen Claritas.

Key Findings

• Non-interest checking accounts grew in 2008 where the head of household was over 35 years of age. However, average balances for non-interest checking accounts were down across all age groups.
• More households had a savings account in 2008 than at the end of 2007—and the type of savings vehicle was driven by the age of the head of household.
  – Older households had the ability to keep higher balances for money market accounts or were able to commit some of their savings to CDs.
  – The younger households kept their savings liquid in fixed-interest savings accounts.
• Money market account penetration decreased year-over-year driven largely by the under age 35 households.
• Fixed interest savings accounts increased for all three age groups, which include under 35, 35-54 and over 55
• The number of households with an IRA and 401K increased, but average balances plummeted for all age groups.

Credit, Loans and Investments

Along with the ability to take advantage of money market and CD accounts, the older the head of household, the more likely they are to have an outstanding non-mortgage credit balance of over $10,000. That level significantly increased for households in the 35-54 and 55+ age groups.

Personal loans also increased since the end of 2007 in the form of home equity loans, student loans and other unsecured personal loans. Penetration of revolving debt accounts, such as credit card debt, decreased which indicates that people were closing their credit card accounts. All the major credit card brands, including Visa®, MasterCard®, Discover® and American Express® showed a decrease in penetration from 2007 to 2008. However, average outstanding credit card balances were on the rise, indicating that households are not reducing the debt they have, but consolidating it to fewer cards.

Investments, including mutual funds, stocks, bonds and cash value insurance accounts all fell from Q4 2007. The only investment account to increase in penetration was the tax-advantaged college plans (529 Educational Plan).

New data makes it clearer than ever: the U.S. is in a white-collar recession.

In the news and in our minds we understandably think of lower-to-middle income households as being the hardest hit victims of the housing, credit crisis, and the ensuing loss of jobs. But as we look back on a full year of recession, surprising patterns emerge that indicate higher-income households have been proportionately hit harder.

Since the beginning of last year, there has been a shift in household credit, according to an analysis of Nielsen’s Aggregated Consumer Economics (ACE) Indicators-a database of ZIP+4 level economic and financial data calculated as averages of individual credit records. Upscale households-those that earn upwards of $100,000 a year-have seen their overdue credit card balances increase by a hefty 40 percent, or more than $2,500 per household. Households with more modest incomes-less than $50,000-have seen an increase of just 14 percent.

With numbers like these, last year’s best customers don’t appear to be this year’s best customers.

What explains the change? One possibility is over-extension. White-collar workers accustomed to year-end bonuses didn’t see them in the first quarter of 2009. The big purchases they made… the growing reliance on credit cards to cover day-to-day expenses… the expectation that it could all be paid down when their bonuses arrived… were disappointed when the bonuses didn’t come, and many jobs were lost. Plus, facing reductions in income, their predicament only worsens as they rely on credit to cover expenses.

Indeed, the outlook for such households relying on credit to get by is not pretty. The ACE analysis also quantifies what people perceive anecdotally: credit has shriveled. Overextended consumers decreased their acquisition of new credit cards and new lines of credit by 18 percent since the first quarter of last year. For their part, credit card companies decreased their efforts to sell new lines of credit by 19 percent, both in terms of new credit cards or new loans.

Moreover, according to recently published reports, credit card companies have cut back further by reducing credit lines for cardholders who have no record of risky behavior, and increasing interest rates for those carrying a balance.

With regulation impending on the credit card space, there is even more change ahead. As this turbulent market settles, marketers should consider targeting downscale households with select, low risk products such as payday advances, pre-loaded gift cards or pre-approved loans of less than $1,000, instead of focusing on upscale households which are customarily the most profitable. But they shouldn’t walk away from the affluent market. Historically, the $100,000 and over household is 30 percent less likely to have a bankruptcy on their file than a mid-scale household.

Marketers who recognize and react to opportunities are the ones who will be positioned for the biggest and quickest turnaround. The key will be in staying close to the customer-no matter how counter-intuitive market developments are-and matching the right offer to the right customer at the right time. Those fundamentals never change.

According to Nielsen Online, 78% of adult online consumers in the U.S. made a purchase via the Web within the previous six months.

Travel-related transactions were most common, with 38% of adult online consumers making at least one travel purchase on the Web in the previous six months.

Large percentages of online consumers also went online to manage their credit card accounts (36%) and conduct personal banking transactions (35%).

Nielsen’s findings are based on data from @Plan, a quarterly survey of approximately 36,000 U.S. Internet users age 18 and older.

In October, eBay and Amazon were the top two online retailers, drawing 49.2 million and 48.3 million unique visitors, respectively.  Wal-Mart, Target, and Netflix rounded out the top five.

“The challenge for retailers is no longer how to lure shoppers online, but how to differentiate their brand among all others,” Nachi Lolla, research director, commerce, Nielsen Online, noted.  “Heading into this competitive holiday shopping season, selection, price, and customer service are the key areas in which retailers can shine.”

View the full press release.

Read coverage of Nielsen’s findings on Digital Media Wire and in Brandweek and BizReport.com.