Credit CARD Act working as intended

A law intended to help consumers reduce debt and limit lenders' predatory practices seems to be working, as interest rates have stabilized and penalty fees now cost less.

Credit card lenders have not instituted changes that many experts predicted would take place, but have instead made it easier for consumers to manage their debt, according to a new study from Pew Charitable Trusts. In the two years since the passage of the Credit Card Accountability, Responsibility and Disclosure Act, interest rates have largely held steady between 12.99 and 20.99 percent, and penalties for late payments and other infractions have either come down or been eradicated.

"The Act created a new equilibrium where interest rates have flattened, penalty charges have declined and a number of practices deemed 'unfair or deceptive' have disappeared," said Nick Bourke, director of Pew’s Safe Credit Cards Project. "Consumers are enjoying safer, more transparently priced credit cards – and banks and credit unions are able to compete on a more level playing field."

However, banks have found ways around some of the restrictions and increased fees on other services, such as checking accounts, to make up for lost revenues.