Five years after the financial crisis, researchers now have enough data to better understand how reforms to consumer finance have produced intended and unintended consequences. A recent paper found that the 2009 CARD Act, which banned some profitable but abusive credit card practices, has saved consumers $20.8 billion a year.
Banks argued that it also tightened access to credit, but a new analysis from the Federal Reserve Bank of Kansas City suggests that caps on swipe fees for debit cards have widened consumer access to free checking accounts. Only the biggest banks cut back on free checking to compensate for an annual loss of $8 billion in swipe fees.
Because small banks with assets under $10 billion are exempt from the CARD Act, the share of small banks offering free checking rose from 37 percent to 44 percent from 2011 to 2012. The volume of consumer accounts at banks that offered free checking rose from 19.4 percent in 2011 to 21.6 percent in 2012, meaning that consumers overall now have more access to free checking. Small banks also reduced some eligibility requirements for free checking, such as minimum balances. At the same time, big banks tended to increase eligibility requirements for free checking accounts.