The Expedited CARD Reform for Consumers Act of 2009 accelerates the implementation of most provisions included in the Credit Card Accountability, Responsibility, and Disclosure Act. Previously, the regulations were set to take effect in February of 2010 or later. Now they will take effect upon enactment of the Expedited CARD Reform for Consumers Act. The Credit Card Accountability, Responsibility, and Disclosure Act expanded consumer protections for people using credit cards by limiting and banning certain types of fees and interest rate increases and by improving disclosures to cardholders. An exemption from the new accelerated schedule is included for a provision related to cardholders with multiple balances when card companies agree to impose a moratorium on increases in rates and fees.
The Middle-Class Position:
Middle Class Supports. The Credit Card Accountability, Responsibility, and Disclosure Act was a major step forward for consumer protections. The legislation ended the most insidious practices employed by credit card companies, protecting consumers from policies that can keep them mired in debt despite their best efforts to dig themselves out. However, the Act delayed implementation of these vital consumer protections for over a year in some cases, allowing card companies to raise interest rates, increase fees, and jack up minimum payments in the meantime. The Pew Safe Credit Cards Project finds that many credit card companies worsened their treatment of consumers in anticipation of the legislation. The Expedited CARD Reform for Consumers Act would ensure that these unfair and deceptive practices end immediately. Although the bill will not aid consumers whose interest rates and fees have been raised in recent months, the Act will prevent card companies from continuing to intensify the financial strain on households already struggling to make ends meet.
From the Experts:
“Our research shows that practices labeled ‘unfair or deceptive’ by the Federal Reserve have remained widespread, and cards from the top issuers still do not comply with the consumer protections provisions of the Credit CARD Act. As Americans wait for issuers to change their practices, hefty penalty fees and charges continue to apply. Congress can help bring fast relief to consumers by accelerating the effective date of the Credit CARD Act.” –Nick Bourke, Manager of Safe Credit Cards Project, Pew Charitable Trusts (October 8, 2009)
“Quite frankly, from the consumer’s perspective, lenders have taken advantage of Congress’s generous time frame in which to implement the [Credit CARD Act]. After lawmakers accommodated card issuers who claimed that they needed time to reprogram computer systems, issuers have used this time to use consumers as pawns in their game to maximize profits. It’s an insult to Congress…We strongly support the solution spelled out in H.R. 3639 – to expedite the implementation date of the law that would help protect cardholders from many of these abusive tactics. Card issuers’ actions have ensured that the need for the Credit CARD Act is greater today than ever.” –Ruth Susswein, Deputy Director of National Priorities, Consumer Action (October 8, 2009)
Beyond this Bill:
The Expedited CARD Reform for Consumers Act provides further evidence that the financial sector cannot be left to regulate itself. In the interim between passage of federal regulations of credits cards and their implementation, card companies did not use the new restrictions as guidelines on which to model their behavior, but took one last opportunity to exploit customers. In the absence of strict federal oversight and regulation, the private sector will often seek to maximize profit without regard for their customers. However, Congress shares a portion of the blame: earlier versions of the Credit Card Accountability, Responsibility, and Disclosure Act included an expedited effective date that might have avoided the need for additional legislation. The Expedited CARD Reform for Consumers Act should not even be necessary.
Effective date of most provisions of the originally introduced version of the Credit Card Accountability, Responsibility, and Disclosure Act: 3 months after passage
Effective date of most provisions of the version of the Credit Card Accountability, Responsibility, and Disclosure Act that was signed into law: 9 months to 15 months after passage
Percentage of credit cards from the 12 largest banks that use practices deemed “unfair or deceptive” by the Federal Reserve: 100
Median advertised range of APRs for credit cards issued in December of 2008: 9.99%-15.99%
Median advertised range of APRs for credit cards issued in July of 2009, after the Credit Card Accountability, Responsibility, and Disclosure Act’s passage: 12.24%-17.99%
Maximum annual fee instituted by Citigroup in August that is imposed when a cardholder does not spend enough: $90
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