Consumers Union, the advocacy arm of Consumer Reports, said Tuesday a new report on credit cards by the Consumer Financial Protection Bureau indicates the Credit Card Accountability Responsibility and Disclosure Act of 2009 has delivered real benefits and savings for consumers, products and practices still exist in the marketplace where more attention is needed.
The bureau assumed authority for the CARD Act in July 2011. The law directs the bureau to review the impact of the law on the cost and availability of credit as well as the level of consumer protections in the credit card market.
The bureau report estimates that the average credit-card late fee went down by $6 after the CARD Act took effect. That reduction resulted in a $1.5 billion decrease in late fees paid by consumers in
The report found the total cost of credit declined by 2 percent between 2008 and 2012. The bureau said young consumers are now better protected from credit cards they can’t afford, and the percent of young adults ages 18 to 20 that have at least one credit card account has dropped by half since the law was passed.
“This report confirms the law is making a big difference in protecting people from some of the worst industry practices,” Pamela Banks, senior policy counsel for Consumers Union, said. “Penalty fees are down, and your bill provides better information about the true cost of your credit.”
However, Bank said issues still remain in the marketplace that need serious attention, but the report shows progress has been made in a short period of time.
One of the areas of concern cited by the bureau report is deferred interest credit cards, which some consumers use to finance purchases without interest for a period of time. If a balance on this type of card isn’t paid in full by a certain date, the accumulated interest may be assessed retroactively, the report said.
Before the CARD Act took effect, credit card companies could charge an overlimit fee for transactions that pushed customers over their credit limit. Since the law now requires that consumers opt in to fees before they’re allowed to exceed their credit limit, the bureau found overlimit fees have essentially been eliminated.