The CARD Act has provided significant consumer benefits, including greater interest rate certainty and fewer fees, but it has also led to higher consumer costs and less access to credit. This is particularly true for those who are new to credit or have had difficulty managing it in the past and would like a second chance.Read Clayton’s full statement.
Our analysis shows that credit card interest rates have increased even in a diminishing interest rate environment. Since the third quarter of 2008, credit card interest rates have increased by more than 72 basis points, a 5 percentage increase, while other consumer credit rates have fallen significantly. During the same time period, mortgage rates fell 268 basis points, a 42 percentage decrease, while auto loan rates fell 204 basis points, a 29 percentage decrease. Comparing the costs, decreased availability and use of credit cards with those of other consumer credit products makes it clear that economic conditions alone can’t explain the changes we’ve seen in the credit card market. The CARD Act has played a key role in the higher rates and reduced availability of credit cards.
As the CFPB reviews the data indicating less credit card availability, we encourage the Bureau to further explore the real impact on consumers, including those who may have turned to higher-priced forms of credit that could raise other consumer protection concerns.
Read ABA's letter.