CRL: CARD Act resulted in more transparent credit card offers
New research from the Center for Responsible Lending (CRL) found that the Credit Card Accountability Responsibility and Disclosure Act (CARD Act of 2009 resulted in increasing transparency for consumers without the negative consequences that some worried would occur.
Among the findings of the CRL report was that the implementation of the CARD Act has resulted in credit card offers that are more clear and transparent without resulting in higher credit card rates or increased difficulty obtaining credit.
“People mistake higher rates on mail solicitations and other offers in the last year as a price hike,” CRL senior researcher Josh Frank said in a statement. “But the facts show that offers now just more closely match actual costs. Prices have been level, but borrowers have a much better picture of what those prices are.”
Overall credit card rates have actually declined since the passage of the CARD Act, the CRL report noted. In addition, the discrepancy between stated rates and actual rates is lessening.
According to the CRL report, new rules and regulations within the CARD Act have led to a decreasing gap between actual credit card rates and stated rates. In fact, consumers paid an estimated annual total of $12.1 billion less in unanticipated finance charges than they would have paid before CARD Act reform, the CRL said.
The decreasing gap between expected rates and actual rates is leading to a much more favorable situation for consumers, the CRL said. Increasing clarity – coupled with lower actual rates – allows consumers to better anticipate possible costs and, in turn, avoid taking on more credit card debt than expected.
“The CARD Act has been a success and it has made rates more transparent while not having any negative, unintended consequences,” Frank, who is the author of the report, said in a video discussing the report.
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