The CARD Act Is Benefitting Consumers

Surveys by the Consumer Financial Protection Bureau have found that the nine largest credit credit card banks representing 90% of the market have stopped hiking interest rates on customers’ existing balances, reduced penalty fees and all but eliminated overlimit charges as a result of the CARD Act enacted last year.

The CARD Act was passed to prevent vulnerable consumers from paying exorbitant interest rates and fees.

The Act allows banks to raise rates for new purchases and one bank periodically reviews accounts to do just that, according to the report. Five others raise rates on delinquent customers, and another bank is testing the practice.

The CARD Act sets new restrictions on late fees capping them at $25 for the first violation and $35 for the second not to exceed the minimum payment due. That has reduced late fees by 50%.

The law forbids issuers from charging over-limit fees to customers unless consumers opted in to the service. That has virtually eliminated the practice. Six of the largest card issuers never charge over-limit fees, even if they the process the transaction.

CFPB chief Prof. Elizabeth Warren said that “much of the industry has gone farther than the law requires in curbing re-pricing and over-limit fees.”


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