The passage of the Credit CARD Act of 2009 has been good for credit card shoppers, according to a new study by the Center for Responsible Lending.
"People mistake higher rates on mail solicitations and other offers in the last year as a price hike," says Josh Frank, a senior researcher at the Center for Responsible Lending. "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 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, according to the Center for Responsible Lending.
But new credit card rules mandated by the Credit CARD Act of 2009 have reversed that trend resulting in greater price transparency for consumers. According to the study, an estimated $12.1 billion in "previously obscure" yearly charges are now stated more clearly in credit card offers.
And because price transparency fosters competition, the long-term effect of the CARD Act is likely to be lower costs for consumers, the study says.
The study also reveals in the year since the implementation of the CARD Act, credit card pricing has remained stable and available credit has not tightened beyond what would be expected from the economic downturn.
A report from the Consumer Financial Protection Bureau details more good news for credit card customers since the implementation of the CARD Act including lower late fees and fewer rate hikes on existing credit card accounts. Monthly credit card statements more clearly break down costs to consumers and overlimit fees have all but disappeared.
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