The American Bankers Association said in a Tuesday letter to the CFPB that while the Credit CARD Act has provided some benefits for consumers, it has reduced credit availability and increased costs to consumers.
“The CARD Act has provided significant consumer benefits, including greater interest rate certainty and fewer fees, but it has also led to higher consumer costs and less access to credit,” Kenneth Clayton, the executive vice president of legislative affairs and chief counsel at the ABA, said. “This is particularly true for those who are new to credit or have had difficulty managing it in the past and would like a second chance.”
Clayton said that credit card rates have increased despite a lower interest rate environment, adding that credit card interest rates have increased by five percent since the third quarter of 2008 while other consumer credit rates have seen substantial decreases. Clayton also said that mortgage rates decreased by 42 percent and auto loans interest rates fell by 29 percent over the same period.
“Comparing the costs, decreased availability and use of credit cards with those of other consumer credit products makes it clear that economic conditions alone can’t explain the changes we’ve seen in the credit card market,” Clayton said. “The CARD Act has played a key role in the higher rates and reduced availability of credit cards.”