Credit Card Act Turns 1 Year Old Today
February 1, 2011
February 22, 2011
It seems hard to believe, but one year ago today Phase I of the Credit Card Act went into effect.
Since that time credit unions have had to modify their statements, work on fee structures, deal with change in terms notices, review interest rate increases, and adapt to a slew of other changes imposed by the regulation.
But what of the consumer?
The Act was designed to protect consumers and provide for more transparent disclosures. Initial worries are that it will become harder for someone with poor credit history to get a card and interest rates will go up.
With the economic downturn, all lenders have tightened their lending practices, so it is hard to say if the Credit Card Act or the economy is the reason why it is harder to get a card.
And interest rates have gone up…maybe?
The Center for Responsible Lending released a recent study on the impact of the 2009 Credit Card Act.
The study shows that the difference between the interest rates offered in solicitations and the rate that they actually pay has been reduced since the implementation of the act. And CRL senior researcher Josh Frank stated, “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 study also finds that the actual prices have remained stable and available credit has not tightened beyond what would be expected from the economic downturn.
While having to comply with the Credit Card Act has been a major burden for credit unions, the end result is that your members now have a clearer understanding of the cost of credit. Wow, a piece of legislation that might have actually done what it was supposed to?
Posted in Compliance.