CARD Act is Making Positive Impact

According to surveys, the Card Act is reducing fees and hidden charges…

Many financial experts and consumer advocates were worried that the CARD (Credit Card Accountability, Responsibility and Disclosure) Act wouldn’t have the positive impact the Federal Reserve was expecting when it was created in 2008. But recent studies show that the intended goals are finally being realized. Consumers are reaping the benefits of steady, albeit a bit higher, interest rates and increased transparency.

According to a series of surveys of cardholders and issuers by the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) there has been a reduction in fees charged to existing customers since the CARD Act was enacted. “As a result of the CARD Act, consumers now have better information about how much they’re paying for credit and how much they might save on interest if they pay down their balances more quickly than they might otherwise have planned,” said Elizabeth Warren, assistant to the president and special adviser to Treasury Secretary Timothy Geithner. “I believe the CARD Act has pushed in the right direction,” she said.

Lenders are required by law to give notification of any proposed increases, giving consumers time to opt out. The study found that rates have not increased for current customers; however, many new customers are seeing higher rates.

With credit card issuers required to be more forthright about terms and conditions, consumers are beginning to have a clearer understanding of their credit card agreements and the costs involved. In fact, the report revealed an estimated $12.1 billion in previously hidden annual charges are now being clearly disclosed to current and new customers. “While it is still too early to accurately gauge the full impact, it is clear the Act has ushered in a new era of empowerment for credit card customers,” said Kenneth Clayton, senior vice president and chief counsel of the American Bankers Association

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