ABA: CARD Act Has Led to Higher Credit Costs, Lower Availability

ABA today filed comments in response to the Consumer Financial Protection Bureau’s request for information regarding the consumer credit card market, pursuant to the Credit Card Accountability Responsibility and Disclosure Act of 2009. The CARD Act requires the Bureau to conduct a review every two years of the consumer credit card market, including a review of the terms of credit card agreements and practices and the effects of the CARD Act on the cost and availability of credit, particularly with respect to non-prime borrowers.

ABA noted that while the CARD Act has provided some consumer benefits, there have been tradeoffs — most notably the increase in the cost of credit and reduction in the availability of credit. For example, prime and subprime credit lines fell from 26 percent in 2008 to 20 percent in 2016, ABA said, and new prime and subprime accounts were down 17 percent and 22 percent, respectively, during that timeframe. The association also noted that the CARD Act’s “ability to pay” provision has caused some qualified borrowers to be denied credit, disproportionately affecting low- and moderate-income borrowers.

ABA also provided feedback to the bureau on several other topics, including credit card rewards programs, variable interest rates, secured credit cards, online and mobile account servicing, innovation in the credit card market, third party comparison sites and debt collection. The association also offered feedback on deferred interest products, pointing out that these programs are both popular and beneficial to customers.

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