On February 22, 2010 - one year ago - some of the meatiest provisions of the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act) went into effect. The act, designed to quash some of the most unfair credit card practices, was signed into law in 2009, and was the subject of my Sunday column.
Overall, the consumer advocates I spoke with said the act lowered costs for consumers and helped them to better understand the cost of carrying a credit card balance.
The Consumer Financial Protection Bureau released a CARD Act fact sheet chock full of compelling statistics about how the act has helped and harmed consumers. For example:
- An Office of the Comptroller of the Currency study shows that the CARD Act has substantially curbed late fees. The total amount of late fees paid by consumers dropped by more than half, from $901 million in January 2010 (before the effective date of the new late fee rules) to $427 million in November 2010 (the latest month for which data are available). The number of accounts assessed at least one late fee declined by almost 30 percent, and the average size of the late fee declined from $35 to $23.
- In the CFPB industry survey, six of the largest nine issuers reported that they have increased the amount of the minimum payment they charge. This change may reduce the total interest paid by certain cardholders, but also may result in increasing late fees.
- The CFPB industry survey found that all nine of the top issuers have continued to process some overlimit transactions — but now, in many cases, without charging overlimit fees. Six of the nine never charge overlimit fees, while three sometimes do so but only for consumers who opt in.
In a speech delivered Tuesday before a group convened to discuss the CARD Act, Elizabeth Warren, special adviser to the Secretary of the Treasury on the Consumer Financial Protection Bureau, praised the credit card industry, and noted that some card issuers made consumer-friendly improvements that went above what was required by law. But Warren said there's more work to do:
The Schumer box she's referring to is named after New York Democratic Senator Charles Schumer. It is the box on credit card promotions that outlines card costs.
While the act has, on the whole, helped consumers, there are always unintended consequences to any law. So readers, have any of you seen rate hikes, doubling minimum payments or any other credit card changes that have hurt your personal finances?
