Center for American Progress, Joe Valenti | “In 2009, President Barack Obama signed into law the Credit Card Accountability, Responsibility, and Disclosure Act, or Credit CARD Act. This law ended credit card industry practices in which interest rates could change at any time and in which hidden provisions enabled companies to charge significant fees without justification. The act also limited credit card marketing directed at college students and added consistency to store gift cards to ensure predictable fees and expiration dates. One year later, the Dodd-Frank Wall Street Reform and Consumer Protection Act greatly extended the Credit CARD Act’s reach by creating the Consumer Financial Protection Bureau, or CFPB, an independent federal agency that monitors banks’ practices in the interest of consumers. These changes have created a clearer, fairer, and more competitive marketplace for consumers and have given them new tools to understand the terms of credit card offers and to pay off their debts responsibly. A recent analysis by four economists found that consumers have saved $12.6 billion in fees annually since the Credit CARD Act’s passage, based on a comparison of 160 million credit cards—including personal credit cards that were subject to the new rules, as well as small-business credit cards that were not. Yet while these laws were significant victories for consumers, some regulatory gaps remain. The new provisions did not anticipate the significant growth in prepaid cards over the past five years. In addition, college campuses have seen high-cost debit cards that erode the value of students’ money take the place of credit cards as a predatory financial instrument. Furthermore, the act’s transparency provisions are often out of reach for consumers who use online and mobile tools, and consumers are not always able to view credit scores for free. Also, their credit records can prevent them from getting a job. This issue brief highlights the specific accomplishments of the Credit CARD Act and notes additional provisions that would better protect consumers in the financial marketplace moving forward.”
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