CARD Act Continues to Make Pricing Clearer Without Raising Rates
Updated data shows reforms continue to foster competition
Center for Responsible Lending
June 7, 2011
Newly available data show CRL’s initial research findings from earlier this year remain true: Since the Credit CARD Act of 2009 was passed, prices have become more transparent, with no constriction of credit and no increase in the interest rates consumers pay. See the update and original report: http://www.responsiblelending.org/credit-cards/research-analysis/credit-card-clarity.html.
The updated information also provides fresh evidence that, prior to the CARD Act, pricing confused consumers, which is why the law was indeed needed. Transparency is important because competition works and markets function properly only when prices are known. A key problem leading to the financial crisis, for example was the prevalence of teaser rates and confusing payment plans that drew families into loans that were deceptively priced and ultimately unaffordable. Honest lenders who transparently priced their products lost in a race to the bottom because their products looked worse at first blush.
As the CARD act shows, common-sense financial reforms make markets more competitive, benefiting everyone.
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About the Center for Responsible Lending
The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation's largest community development financial institutions.