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Consumer bureau begins new look at credit card rules

CFPB to re-examine 2009 CARD Act

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Are credit card users still falling victim to deception or unfair practices that should be outlawed?

That's what the Consumer Financial Protection Bureau will be looking into, starting now. The watchdog agency launched a call for comment last week as part of a study on the effects of the Credit CARD Act, which was signed in May 2009. Consumers, as well as card issuers and industry analysts, are invited to give their views.

The bureau "is seeking to understand how the credit card market is working in practice and how the CARD Act changes have affected consumer and credit card issuers," CFPB Director Richard Cordray said in a statement.

Consumer bureau checks up on CARD ActCredit card issuers increased card rates before and right after the passage of the CARD Act, according to national average rates compiled by CreditCards.com.

A major provision of the law prohibited rate increases on existing balances for consumers with up-to-date payments. The law also restricted over-limit fees and late fees, as well as increases in card rates during the first year an account is open.

One of the questions the agency wants to explore is the cost and availability of credit. In the debate over the law, industry advocates argued that restrictions on card issuers would pull back their offerings, increasing costs for consumers.

The consumer bureau found in 2011 that the law had mostly halted rate hikes on existing accounts, while reducing late fees and over-limit fees.

Now the agency is looking at the effect of changes in pricing, marketing or other practices by card issuers; whether the cost and availability of credit has declined or riskier customers have been shed.

Rates rise on new card offers
During the debate leading up to the act's passage, industry officials predicted it would result in higher rates for everyone, and for new card offers, that has come true.

According to CreditCards.com's rate survey of 100 credit cards, minimum rates in new card offers posted by issuers rose from the 11.5 percent level during the year before passage of the CARD Act (whose full name is the Credit Card Accountability Responsibility and Disclosure Act of 2009.). They continued to rise during 2009, jumping about a percentage point to 14 percent in the weeks before the law took effect in 2010. Since then they rose gradually to the 15 percent neighborhood, where they have leveled off.

Supporters of the act point to a different set of rates: those actually paid by people carrying credit card balances. Federal Reserve figures on those rates show a decline since 2009. Banking groups attribute at least part of the decline to some consumers losing access to credit cards.

Get involved
Consumers who want to submit comments may do so by mail or online:

  • By mail -- Address comments to Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G St. NW, Washington, D.C. 20552. Refer to the docket number CFPB-2012-0048.
  • Electronically -- Go to http://www.regulations.gov/, search for docket CFPB-2012-0048, and follow instructions for submitting comments.

Earlier stories: Winners, losers three years after CARD Act's passage, Creative new fees escape CARD Act, A guide to the Credit CARD Act of 2009

Published: December 27, 2012


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Credit Card Rate Report

Updated: 04-18-2014

National Average 15.00%
Low Interest 10.37%
Balance Transfer 12.64%
Business 12.80%
Student 13.27%
Cash Back 14.84%
Reward 14.96%
Airline 15.30%
Bad Credit 22.73%
Instant Approval 28.00%

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