Credit Card Clarity: CARD Act Reform Works

Published: June 1, 2011

NEW! Updated CARD Act Research (June 2011):  Clearer Pricing Not Raising Rates
Read the full, original report or executive summary from February 2011.
Watch our 4.5 minute video of Senior Researcher Josh Frank discussing the findings.


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New credit card rules help consumers by making credit card pricing significantly clearer, new CRL research finds. New rules lower costs by spurring competition, making it harder for issuers to manipulate or arbitrarily raise prices.

CRL's research shows that the Credit CARD Act of 2009 has reversed much of the unclear pricing on credit cards, without leading to higher rates or more difficulty in getting credit.

These findings refute claims made by opponents of the credit card reforms. “People mistake higher rates on mail solicitations and other offers in the last year as a price hike,” said CRL senior researcher Josh Frank, author of the report. “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.” 

The increased transparency documented in the report reverses a trend of increasingly unclear pricing that for years misled consumers into believing they would pay less for credit card debt than was true.

The difference between the stated rate on credit card solicitations and the rate consumers actually paid widened to unprecedented levels by 2004 and stayed at those levels through 2008. This difference narrowed markedly in the wake of CARD Act reform: Stated prices on solicitations have moved much closer to actual prices, which have remained steady.

Figure 1:  Stated Rates and Actual Rates Paid on Consumer Credit Cards 

The study also finds that, in the year since the CARD Act’s implementation, actual prices have remained stable and available credit has not tightened beyond what would be expected from the economic downturn.

Earlier CRL research has shown that, in the absence of basic rules, credit card issuers relied on confusing, complex pricing to charge more than consumers expected or understood.