Card Act Cleared Up Credit Cards’ Hidden Costs

November 8, 2013
New York Times  
credit card news

The 2009 Credit Card Accountability Responsibility and Disclosure Act, better known as the Card Act, was intended to force down the hidden fees that card issuers collect from customers. Researchers led by University of Chicago economist Neale Mahoney found that the law worked as intended, reducing the costs of credit cards -- especially for borrowers with flawed credit -- with no signs of higher interest charges or reduced access to credit.

The study estimated that the law -- which among other provisions sets limits on fees and places restrictions on interest rate hikes -- is now producing savings of $20.8 billion annually for U.S. consumers. The researchers looked at information on more than 150 million credit card accounts, finding that the new law saved customers an annualized 2.8 percent of the average daily balance on cards.

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