CFPB Releases Second CARD Act Report

On December 3, the Consumer Financial Protection Bureau released its updated report on the impact of the Credit Card Accountability Responsibility and Disclosure Act (“CARD Act”) since its inception. According to the CFPB, the CARD Act has helped reduce the cost of credit card fees by eliminating certain back-end pricing practices. The CFPB also found that credit has generally become more available to consumers, and the number of new accounts has grown faster than in almost every other major consumer credit market. The report found conditions remained the same or improved for consumers since the last review, including:

  • Consumers have avoided more than $9 billion in over-limit fees due to the CARD Act’s requirement that companies get an affirmative opt-in from consumers to be charged for exceeding their credit limit;
  • Consumers have saved more than $7 billion in late fees, a 20 percent decline since the CARD Act;
  • Total cost of credit is almost two percentage points lower than before the CARD Act;
  • Available credit has increased ten percent since 2012; and
  • New account volume is growing with more than 100 million credit card accounts opening in 2014.

While the CFPB believes the CARD Act addressed many problematic practices in the market, the Bureau has further concerns, including deferred-interest promotions, subprime credit-card company offerings, unclear rewards programs, debt collection practices, and lengthy and complex credit card agreements.

Responding to criticisms that increased regulation would constrict credit availability and create higher costs, CFPB Director Richard Cordray stated:

Of course, we should and we will make sure that we are mindful of these concerns. We can draw up the greatest consumer protections ever devised, but if consumers cannot get access to credit, then there is nothing to protect. You cannot have responsible lending unless you have lending in the first place. But at the same time, we need to be wary of prophets of doom whose real agenda is to hamstring effective regulation in order to preserve predatory practices.

The CFPB’s press release can be found here.