*This is the first section of a two-part look at the effects of the CARD Act after its first six months. Part two will be published Friday, July 30.
The Credit Card Accountability Responsibility and Disclosure (CARD) Act has done a lot to help consumers in the fight to receive a fair deal from credit card issuers, according to a study by The Pew Health Group (PDF). The study, titled “Two Steps Forward,” focuses on what the CARD Act has accomplished in the six months it has been in place.
Overlimit fees, which were included on more than 80% of cards in July 2009, now appear in less than 25% of card contracts. Overlimit fees are charges added to your account when you exceed your credit limit.
Arbitration clauses, which make it harder for you to take your card issuer to court to settle grievances, are also much less common post-CARD Act. Fewer than 10% of credit cards carry arbitration clauses, compared to 68% one year ago.
Interest Rates Under Control
One of the main goals of the CARD Act was to minimize the “unfair or deceptive” practices of credit card companies. These practices included big interest rate increases for minor contract breaches, enacting fees without user consent and the automatic allocation of payments to accounts with lower interest rates.
Early returns suggest the act successfully has limited many of these practices. According to Pew’s research, 100% of credit cards from large banks included these and other unfair practices. With these now banned, consumers have an easier road to fair credit.
No New Fees — Yet
Critics of the CARD Act voiced their fears that credit card companies would add new types of fees in an attempt to catch up with regulators and recoup some of their lost capital. That hasn’t happened yet, according to the Pew research.
The past year has seen no hint of a trend toward adding new varieties of fees. Median annual fees did rise by about $9 per year between July 2009 and March 2010, but issuers disclosed their fees in government-mandated charts and tables.
CARD Act Info
The CARD Act was enacted in 2009 but did not become law until February 2010. It was created in an attempt to create a more fair and transparent credit marketplace. The legislation was sponsored and eventually approved by Democratic President Barack Obama but was backed by 90 of 95 Senate voters and highly regarded by Democrats and Republicans alike.