Ed's Blog

CFPB Report Shows Credit CARD Act Works

By Ed Mierzwinski
Consumer Program Director

Mierzwinski, CARD Act hearingLast week, the CFPB released a report showing that the landmark PIRG-backed Credit CARD Act of 2009 is saving consumers billions of dollars by helping them avoid penalty fees and unfair interest rate increases. There's still work to be done, of course, but the law ended some of the worst industry practices that included a variety of tactics to trick consumers into paying late. Then, the firms tripled their interest rates in addition to charging sky-high penalty fees. Even worse, the companies figured out a trick, called "universal default," to raise the rates of consumers who were never late. That 2009 Credit CARD Act, championed by Rep. Carolyn Maloney (NY) and Sen. Chris Dodd (CT), put an end to these practices. It also ended the practice of giving away free pizza on college campuses as an inducement to get students to sign up for cards that they couldn't afford to repay and required card companies to disclose the contracts with universities allowing them to target undergraduates for school-branded credit cards.

We joined CFPB director Richard Cordray, deputy diector Steve Antonakes, and several consumer and industry experts at a public hearing in Chicago on October 2 to discuss the report's findings. In my remarks, which begin at approximately minute 36:09 of the video, I describe how the credit card industry, driven by a more-profits-every-day-mentality exacerbated by misguided Wall Street deregulation in 1999, ratcheted down the thumbscrews on consumers. First they raised rates on late-pays, then they tricked other consumers into becoming late-pays, then they raised rates on on consumers who'd never been late, and then on everyone else. Congress finally took action, aided no doubt by the backdrop of the financial crisis and their own anger at the credit card industry, which had essentially promised Congress that if it passed draconian bankruptcy legislation -- which a PIRG-backed coalition including Professor Elizabeth Warren had fought for years until it finally passed in 2005 -- they'd be satisfied. They weren't.

Director Cordray provided highlights of the CFPB report in his remarks in Chicago:

"The law set standards for when late fees can be assessed. Congress established that credit card bills must be due on the same date each month and that card issuers generally cannot charge a late fee unless consumers are given at least 21 days to pay their bill. The law also established limits on how much can be charged in late fees. As a result, we found that the average size of late fees declined since the passage of the CARD Act. Based on the credit card accounts we studied, representing most of the market, we estimate that the average late fee decreased by $6 after the CARD Act took effect. That means that these consumers paid $1.5 billion less in late fees in 2012 than they would have paid had late fees remained at their pre-CARD Act levels. [...] We did find that annual fees and interest rates have increased since 2008, which indicates a shift from hidden back-end pricing toward more transparent front-end pricing that consumers can understand and evaluate more easily. Even more significantly, however, we found that the total cost of credit, which includes all fees and finance charges, declined between 2008 and 2012 by two percentage points."

The law also included many changes suggested in U.S. PIRG Education Fund's 2008 report The Campus Credit Card Trap. The CFPB report found, according to director Cordray:

"The CARD Act has provisions that were explicitly designed to better protect young consumers from getting credit cards they cannot afford. In the years prior to the CARD Act, it was often too easy for students to rack up credit card debt they could not pay back and damage their credit rating for years to come. When I was serving as the Treasurer of Ohio, I heard many bitter complaints from parents about the aggressive marketing practices on college campuses that targeted naïve 18-year-olds just away from home for the first time"

However, much more work must still be done to clean up the credit card marketplace. In particular, the marketing of unfair add-on products has been the subject of four major CFPB enforcement actions where companies were forced to return nearly $800 million in refunds to consumers. High-cost, low-balance fee harvester credit cards targeted at previously bankrupt consumers are also a problem. But enactment of the CARD Act was an enormous step forward to put money back in consumer pockets. Its success shows that good regulation makes markets work better. And now, with the CFPB as the consumer regulator for big banks, we can expect vigilance against new unfair practices.

Also last week, some academics and regulators released their own study supporting the CFPB's findings. Their report estimated over $20 billion in consumer savings from the CARD Act.

If you have a complaint against your credit card company, or any financial firm, complain to the CFPB.

Comments

I appreciate your idea here. Definitely it has a good content. http://www.promptessay.com/Thank you for imparting more of your own thoughts. Good job!

I have recently started a blog, the info you provide on this site has helped me greatly. There is obviously a lot to know about this. I think he did some good things in features also. Keep working, great job! Thanks for a very interesting blog. What else can I get that kind of information written in such a perfect approach? I have a company that I"m simply now operating on, and I"ve been on the look out for such information.
http://goo.gl/Ltaf1w
http://goo.gl/CBy6ok
http://goo.gl/v4h3vu
http://goo.gl/W18zvU
http://goo.gl/YkQUe4
http://goo.gl/3AR4Yn
http://goo.gl/CfMSCN
http://goo.gl/gQfGyg
http://goo.gl/AKZ5uC
http://goo.gl/6Du9vL
http://goo.gl/5Rw9kG
http://goo.gl/NvDCfi
http://goo.gl/rWpFgu
http://goo.gl/LTwuVQ
http://goo.gl/BkTrFg
http://goo.gl/KwfmBX
http://goo.gl/2PW0yM
http://goo.gl/oMC4TX

Despite these improvements, not all toys on store shelves are tested by the Commission and parents still need to take care to seek out safe toys. Our Trouble in Toyland survey found five major hazards in the toys we surveyed note : Web page addresses and e-mail addresses turn into links automatically. : http://goo.gl/QX1YL2 http://kwn.me/p243
http://goo.gl/ms9gJ2
http://goo.gl/G1cGxl http://goo.gl/Ibe4n0
http://goo.gl/dKoer7 http://kwn.me/p244 Precisely what a few clearance about ones v-beck with the - it looks like . Voting rights were the big issue in committee last week. Keep an eye out for updates as we move forward! Every day, our families are bombarded by a toxic soup of chemicals found in consumer products, in air, food and water pollution. Maryland PIRG supports legislation that at www.muhammadridwan.web.id

I loved as much as you will receive carried out right here. The sketch is tasteful, your authored material stylishnonetheless, you command get got an shakiness over that you wish be delivering the followingunwell unquestionably come more formerly again since exactly the same nearly a lot often inside case you shield this increase.

Check the interest info http://arentin.blogspot.com/2014/02/unit-link-terbaik-di-indonesia-commo... , & don't forget please click helpful entry http://arentin.blogspot.com/2014/02/hotelmurahdijakarta.html & good entry http://www.postingku.com Cipto & entry http://arisnbw.blogspot.com/2013/10/ciptojunaedy.html Cipto & good article http://arisnb.nulis.web.id/cipto-junaedy.html that interesting & helpful article http://kerajinantembaga.aagallery.co.id dan http://arentin.blogspot.com/2013/05/cipto-junaedy.html and http://www.aagallery.co.id also http://www.aa-gallery.co.id and http://www.aagallery.net . Don't for get it!

http://mahirseogoogle.blogspot.com/2014/06/adro.html ADRO TEXTILE Konveksi Murah Indonesia – Tlp 081362666444 ! ~ http://clorot.blogspot.com/2014/04/kursus.html Kursus SEO dan internet marketing terbaik di Jakarta

You may post on the professional credentials for the blog owner. You could express it's outstanding. Your blog experience can springboard your click through. Sbobet Asia

http://www.smartgridbusinessnetwork.org In many of my articles I've explained the benefits of owning variable speed pool pumps. One of the major benefits I continually point out is the reduction of energy consumption on the power grid.

http://www.living-business.org You could own the Real Estate or be the company that provides the service. Or combine them and get the best of both worlds.

I have recently started a blog, the info you provide on this site has helped me greatly. There is obviously a lot to know about this. I think he did some good things in features also. Keep working, great job! Thanks for a very interesting blog. What else can I get that kind of information written in such a perfect approach? I have a company that I"m simply now operating on, and I"ve been on the look out for such information.
BUNDA.COM AGEN TEXAS DAN DOMINO ONLINE INDONESIA TERPERCAYA |
BENGKEL LAS"

Nice work by the author of this! (www masterpapers com) This is absolutely awesom! Great work!

Perfect way to have more (essaymarket co uk) information about this good topic

So luck to come across your excellent blog. Your blog brings me a great deal of fun.. Good luck with the site. Mechanics Gold Coast

http://www.smartgreenbusiness.org I wish I could take about a week to give business people an introduction to Green business practices. Environmentalism has become an immense diversity of issues, and even scaling down to the parts that apply to business leaves enough information to fill a truckload of books.

http://www.minoritybusinesssolutions.org Small minority business owners are faced with a lot of obstacles when attempting to create the right small business marketing strategies. There are so many barriers to overcome with marketing

Its good to see that finally its going to be implemented in such a good way.
http://matne.wordpress.com/

http://www.traveltohelp.org In order to help kids get a nap or just a little rest while traveling, it is helpful to make them as comfortable as possible. One way to do this is by bringing along a comfortable pillow for traveling.

http://www.businesstheory.org This is a common attitude because change is a good thing for business, and organizations implement changes all of the time to make improvements on processes, productivity, and efficiency. Here are a few ways you can make the transition of change easier for your employees.

The first several months of my site there were no comments; just give it time; now they come in like crazy every day! Please visit corturi expozitii Thanks.

confidante of the people upset the people to rise up and prove that small blogs andika son will not die despite previous blog tela abolished the google but worth it for you to see and visit her cool blog andika after it in the invite to stop by again ADRO TEXTILE konveksi murah indonesia - Tlp 081362666444 ! and the last stop at the Andika putra I hope you entertained with this and be the best if only one day of nothing, but it would be nice if you will be the best for onward....

more info: http://andikaputra05.blogspot.com/2014/05/textile.html

Priority Action

The overuse of antibiotics on factory farms is threatening the effectiveness of lifesaving antibiotics. Call on the Food and Drug Administration to put an end to the worst practices.

Support Us

Your donation supports U.S. PIRG’s work to stand up for consumers on the issues that matter, especially when powerful interests are blocking progress.

Consumer Alerts

Join our network and stay up to date on our campaigns, get important consumer updates and take action on critical issues.