Ever since the Credit CARD Act took effect last year, many worried it would not provide fair credit card opportunities for consumers, but a new study shows that it has made a positive difference. According to the Center for Responsible Lending, the law’s implementation one year ago has not resulted in interest rate increases for current customers, which means it may have accomplished the intended goal.
Consumers Benefit from Steady Interest Rates, Increased Transparency
There have been a number of benefits resulting from the Credit CARD Act that took effect on Feb. 22, 2010. In the private lending watchdog group’s study, it was revealed in addition to steady interest rates, borrowers have gained access to added transparency.
According to the law, issuers were not allowed to increase the rates of current customers without plenty of warning and justification. So far, rates have not increased for current customers. However, there have been complaints of rates as high as 59 percent for new customers, but only if they choose to accept those rates.
The study also found consumers have a greater understanding of their contracts because issuers are making credit card statements more transparent. In fact, the report revealed an estimated $12.1 billion in previously hidden annual charges are now being clearly disclosed to current and new customers.
Consumers Still Receive Offers
Another benefit of last year’s reform is that consumers still have access to credit card offers despite warnings from financial institutions that issuers would cut back on their willingness to extend credit.
Direct-mail offers are being issued at a volume that is consistent with economic conditions, which means issuers have chosen not to punish consumers as expected for all of the changes that have occurred.
It’s good to know that reform has increase consumers’ ability to access credit cards without feeling taken advantage of after becoming a new customer. This positive change could mean more consumers might be willing to take on credit (hopefully in a responsible manner) in the years to come.
