Credit card fees can be expensive and annoying, there’s no doubt about it. But many of them can be avoided if you’re careful and others may be worth paying if you get something worthwhile. For example, many of the best rewards credit cards charge annual fees, but people who use them frequently are able to earn additional rewards that outweigh the extra cost.
Given the myriad different fees that credit cards are known to charge, the differing situations in which they apply, how quickly they can add up, and the corresponding implications for your account/credit standing, it’s definitely worth familiarizing yourself with the ins and outs of these pesky charges. [...]
The Credit CARD Act of 2009 fundamentally improved the credit card market, increasing transparency and prohibiting a number of predatory billing practices. While controversial at the time of passage (largely due to banking industry revenue concerns), the law has since proven quite effective. According to a 2013 report from the Consumer Financial Protection Bureau, revealed a 6% decline in the average credit card late fee as well as the effective extinction of over-limit fees and an overall two percentage point decline in the cost of credit between 2008 and 2012.
However, all these rule changes can be understandably confusing, and the shifting regulatory winds likely aren’t finished blowing either. We therefore sought the opinions of experts in the fields of personal finance, public policy, and banking regulation for insight into the regulatory environment and tips for how consumers can safely navigate the ever-changing world of credit cards. You can check out what they had to say below. [...]
Amy Traub – Demos
What are your views on the CARD Act of 2009 – was it an overall success or failure? How would you describe the post-recession regulatory environment?
“Research conducted by Demos in 2012 showed that the CARD Act was helping households to pay down their credit card balances faster, avoid excessive fees and interest rate hikes, and was especially effective at stopping the most abusive practices of the past, like over-the-limit fees.
More recent studies by the Consumer Financial Protection Bureau and by independent researchers have provided additional evidence that the legislation has been highly successful and found that the law is saving families upwards of $20 billion per year in fees. Now the evidence is in, and it’s clear that the CARD Act is a smart regulation that has made credit cards a better, fairer financial product for American consumers.”
Would the last few years have played out any differently without the CARD Act in place? If so, how?
“Without the CARD Act, American households would have been paying $20 billion more per year in fees to banks and card issuers. That would have meant more household debt and likely less of the consumer spending the economy needs to support jobs. As it is, U.S. banks have had a huge recovery since the recession – their profits are higher than ever – but middle-class families aren’t faring so well. Median household incomes still haven’t reached pre-recession levels. All indications are that this divergence between bank profits and the balance sheets of ordinary Americans would have been even more stark if not for the common-sense consumer regulations in the CARD Act.