U.S. consumer watchdog says 2009 law reduced credit card fees

Reuters

WASHINGTON, Oct 2 (Reuters) - The total cost of credit cardfees and interest payments to U.S. consumers fell and chargesfor going over allowable credit limits effectively disappearedafter a 2009 law cracked down on the market, according to areport released on Wednesday.

The U.S. Consumer Financial Protection Bureau's first reporton the so-called CARD Act said costs are easier to understandand consumers are better protected from credit cards they cannotafford than they were before Congress passed the law.

But regulators said they still are looking into whethercredit card companies treat consumers fairly when they marketextras such as identity theft protection and credit monitoring.

Congress passed the 2009 law in hopes of making the creditcard market more transparent for borrowers. It called forissuers to check whether consumers could pay for credit cards,and restricts certain fees and changes to interest rates.

"The bottom line at the time was that consumers had no goodway to assess the true cost of their credit card upfront,"Richard Cordray, the consumer bureau's director, said inprepared remarks for a speech on Wednesday.

"The act eliminated many unfair fees, made some marketpractices more transparent, paved the way for easier comparisonshopping, and created a market where consumers can see the costsupfront," Cordray said.

The bureau was created by the 2010 Dodd-Frank Wall Streetoversight law and given authority over credit cards, mortgagesand other consumer financial products.

In 2011, when it formally opened, the bureau took onresponsibility for implementing the CARD Act. The reportreleased on Wednesday was required by the law.

One key concern of lawmakers since the 2007-2009 crisis hasbeen that the meltdown and resulting efforts to crack down onWall Street may have restricted borrowers' access to credit.

The consumer bureau's report said responsible access tocredit cards remains available, although consumers now must askfor their credit limits to be raised rather than having cardcompanies boost them automatically.

Annual fees and interest rates for credit cards have goneup, the bureau found, but the total cost of credit has declined.That is because penalties for late payments and other unexpectedfees have gone down, the report said.

Fees for going over allowable credit limits have basicallybeen eliminated, the bureau said. The CARD Act says card issuerscan no longer allow consumers to exceed their limits unless thecardholders first agree to pay fees when they go over.

The consumer watchdog said it planned to study some creditmarket issues that were not addressed by the 2009 law, includingso-called "add-on" products, or optional extras that are oftenmarketed to cardholders.

Such products already have been a focus of enforcementactions against card companies, including Discover FinancialServices and Capital One Financial.

Regulators also want to look into whether credit cardcompanies make clear disclosures to borrowers who pay theirbills online rather than receive a monthly statement.

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