The CFPB released on Tuesday a report showing that the 2009 Credit CARD Act reduced penalties and clarified the cost of credit cards to consumers—total cost of credit fell by two percent between 2008 and 2012.
“Credit cards play a valuable role in the everyday lives of American consumers,” CFPB Director Richard Cordray said. “The CARD Act brought better consumer protections and fairness to the marketplace, but we found there is more work to be done.”
The legislation was signed into law in May 2009 with the goal of enhancing the transparency of practices in the consumer credit card market. The law seeks to reduce excessive late fees, establish an opt-in requirement for overlimit fees and to prevent unexpected interest rate increases.
The CFPB found that the law accomplished its aim of cutting excessive fees, by $2.5 billion, and that the size of fees declined by $6 after the legislation took effect. The report also notes that access to credit remains available and that younger consumers are better protected from obtaining credit cards they cannot manage.
Though the CARD Act addressed many problematic industry practices, the CFPB noted some additional areas of concern that still require attention, including add-on products, fee harvester cards, deferred interest products and disclosures.