Make us your home page
Instagram

Tougher credit card rules pay off for consumers

WASHINGTON — Credit card rules that took effect last year curbed interest rate increases and late fees and almost stamped out charges for exceeding credit limits, according to the new Consumer Financial Protection Bureau.

Before the new rules, 15 percent of existing credit card accounts were repriced with a new interest rate each year; that has since fallen to 2 percent, according to an agency study released Tuesday. Overlimit fees — charged when customers exceed credit limits — have "virtually disappeared in the credit card industry," the study found.

Late fees fell to $427 million in November, less than half the $901 million total for January 2010, the last month before the rules took effect. The average late fee declined to $23 from $35 over the same period, according to the study.

Elizabeth Warren, the special adviser in charge of setting up the bureau, is getting the word out about the Credit Card Accountability, Responsibility and Disclosure Act. Its main provisions, such as bans on sudden, steep interest rate increases and better disclosure of the terms, took effect one year ago. Warren has made credit cards and mortgages top priorities for the bureau, scheduled to officially begin its work July 21.

Consumer and industry groups praised the law in separate statements. The law has ended "some of the bait-and-switch tactics that unfairly trap credit card consumers in high-interest debt," Pamela Banks, senior policy counsel for Consumers Union, the publisher of Consumer Reports, said in a statement.

Steve Bartlett, chief executive officer of the Financial Services Roundtable, said in a statement that new disclosures give card users "an effective tool for controlling the cost of the financial products they use every day."

The consumer bureau used data collected voluntarily from the nine largest bank card issuers and used an unpublished report from the Office of the Comptroller of the Currency.

Consumers are also aware of changes on their monthly card billing statements, though only 32 percent of them understand their credit card agreement, a separate survey of consumers conducted for the consumer agency found.

While Warren has lauded the credit card law, she has argued for a new approach that emphasizes simpler disclosure to help consumers to comparison shop.

"We can probably agree that this approach — write a rule, avoid a rule, write another rule — is costly for consumers and the industry," Warren said. "Because it multiplies the number and complexity of rules, this approach creates special challenges for those smaller banks and credit issuers that still offer credit cards to their customers."

Tougher credit card rules pay off for consumers 02/22/11 [Last modified: Tuesday, February 22, 2011 8:39pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Bloomberg News.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Massachusetts firm buys Tampa's Element apartment tower

    Real Estate

    TAMPA — Downtown Tampa's Element apartment tower sold this week to a Massachusetts-based real estate investment company that plans to upgrade the skyscraper's amenities and operate it long-term as a rental community.

    The Element apartment high-rise at 808 N Franklin St. in downtown Tampa has been sold to a Northland Investment Corp., a Massachusetts-based real estate investment company. JIM DAMASKE  |  Times
  2. New York town approves Legoland proposal

    News

    GOSHEN, N.Y. — New York is one step closer to a Lego dreamland. Goshen, a small town about fifty miles northwest of the Big Apple, has approved the site plan for a $500 million Legoland amusement park.

    A small New York town, Goshen approved the site plan for a $500 million Legoland amusement park. Legoland Florida is in Winter Haven. [Times file  photo]
  3. Jordan Park to get $20 million makeover and new senior housing

    Real Estate

    By WAVENEY ANN MOORE

    Times Staff Writer

    ST. PETERSBURG —The St. Petersburg Housing Authority, which bought back the troubled Jordan Park public housing complex this year, plans to spend about $20 million to improve the 237-unit property and construct a new three-story building for …

    Jordan Park, the historic public housing complex, is back in the hands of the St. Petersburg Housing Authority. The agency is working to improve the 237-unit complex. But the latest plan to build a new three-story building for seniors will mean 31 families have to find new homes. [LARA CERRI   |   Tampa Bay Times]
  4. Coming soon at two Tampa Bay area hospitals: a cancer treatment that could replace chemo

    Health

    A new cancer treatment that could eventually replace chemotherapy and bone marrow transplants — along with their debilitating side effects — soon will be offered at two of Tampa Bay's top-tier hospitals.

    Dr. Frederick Locke at Moffitt Cancer Center in Tampa is a principal investigator for an experimental therapy that retrains white blood cells in the body's immune system to fight cancer cells. The U.S. Food and Drug Administration approved these so-called "CAR-T" treatments for adults this month. In trials, 82 percent of cases responded well to the treatment, and 44 percent are still in remission at least eight months later, Locke said. [CHRIS URSO   |   Times]
  5. Regulator blasts Wells Fargo for deceptive auto insurance program

    Banking

    Wells Fargo engaged in unfair and deceptive practices, failed to properly manage risks and hasn't set aside enough money to pay back the customers it harmed, according to a confidential report by federal regulators.

    Wells Fargo engaged in unfair and deceptive practices, failed to properly manage risks and hasn't set aside enough money to pay back the customers it harmed, according to a confidential report by federal regulators.
[Photo by Spencer Platt/Getty Images, 2017]