Oct 2nd, 2013 @ 8:33 PM by Amber Nelson
Credit card fees have dropped over the past four years thanks to the financial legislation, but access to credit has also fallen, according to a new report from the Consumer Finance Protection Bureau.
The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD) made sweeping changes across the credit card industry in an effort to protect borrowers from excessive fees and penalties. The new rules restricted credit card companies from raising interest rates on existing balances, charging fees when customers exceeded their limits and imposing oversized fees for late payments.
Since the CARD act took effect, the CFPB found that the average credit card late fee fell $6 and total late fees assessed in the past four years fell by $1.5 billion. The fees that consumers were charged for spending more than their limit fell a total of $2.5 billion.
Of course total credit card lending and borrowing declined during that time as well. In the second quarter of this year, U.S. consumers had a combined credit card debt load of $668 billion, down from $843 billion during the first part of 2009. Some of that decrease is due to the elimination of many subprime consumer accounts since the financial crisis began. Credit card firms have dramatically increased their credit standards for those seeking new accounts.
“While consumers are paying less interest on credit cards, that’s only to the degree they have access,” Ken Clayton, chief counsel at the American Bankers Association said in a statement. “Unfortunately, the CARD Act has contributed to a reduction in the availability of credit cards, particularly for those who have imperfect credit histories or no credit history at all.”
Still overall, the CFPB is pleased with the direction the credit card industry is taking. The report stated, “The end result [of the CARD Act] is a market in which shopping for a credit card and comparing costs is far more straightforward than it was prior to enactment of the Act.”About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.