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Study: CARD Act Is Helping Consumers

NEW YORK (MainStreet) – It’s been a year since the consumer protections of the 2009 CARD Act took effect. But have they made it easier for consumers to understand what their cards cost as advocates promised?

Indeed they have, says a new study by the Center for Responsible Investing, a consumer advocacy group.

“New credit card rules mandated by the Credit CARD Act of 2009 have resulted in significantly greater price transparency for consumers,” the Center reports. “This reverses a trend of increasingly unclear pricing that for years misled consumers into believing they would pay less for credit card debt than was true.

“Inaccurate pricing information likely caused many borrowers to take on more credit card debt than they otherwise would have,” the report continues.

The study looked at the difference between the “stated” rate on solicitations consumers received, mostly in the mail, and the actual rate they ended up paying after they received their cards. The actual rate includes not just the interest charged on card balances but also other fees that consumers have long had difficulty assessing.

“An estimated $12.1 billion in previously obscure yearly charges are now stated more clearly in credit card offers,” the center said.

This gap between stated rates and actual ones “widened to unprecedented levels by 2004 and stayed at those levels through 2008,” the center reported. “This difference narrowed markedly in the wake of reform, with stated prices on solicitations moving much closer to actual prices.”

The study also found that card rates had remained stable during the year since the act took effect. Card issuers had argued the law would lead to higher rates.

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