Credit card regulation has brought mixed results
12/08/2010 - By Tom Lu
Recent credit card regulation - such as the CARD Act and the financial reform bills Durbin amendment - has created a new milieu for consumers who swipe at credit-debit machines.
The Pew Charitable Trusts Safe Credit Card Project reviewed nearly 450 online credit card applications offered by the 24 largest bank and credit union card issuers in the U.S.
While these financial institutions have implemented many of the reforms from the CARD Act such as freedom from retroactive rate hikes, protection against overdraft charges and arbitrary APR increases, the study found that nine in 10 participating banks and nearly half of credit unions feature steep penalty rates, charging as much as 29.9 percent interest for most major credit cards.
Additionally, almost half of those surveyed refused to disclose their penalty rates to consumers. However, many of the additional fees that consumers expected never materialized. In fact, the number of cards with annual fees declined to 14 percent compared with 15 percent in 2009.
The recently passed Durbin amendment will introduce a new set of regulations for consumers and credit card companies to navigate. The amendment grants the Federal Reserve the authority to regulate debit card interchange fees, as well as allowing customers to opt out of overdraft protection programs, which charge individuals a fee for withdrawing more money than was they had.
Articles written by ChargeNational.com's editorial team. For more information, click here.
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