CBA Response to CFPB RFI to Study the Effects of The CARD Act on the Credit Card Market

Dear Ms. Jackson:

The Consumer Bankers Association (CBA)1 appreciates the opportunity to submit comments in response to the Consumer Financial Protection Bureau’s (CFPB’s or Bureau’s) request for information (RFI) to study the effect of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) on the credit card market. The CFPB states it will use the information collected under this request to produce a report to Congress on the state of the consumer credit card market, as required under the CARD Act, and to inform its policy decisions going forward.

Summary of CBA’s Comments

  •  The CARD Act has been successful in that it accomplished what was intended, which is to establish fair and transparent practices with regard to credit card extensions of credit. As a result, further restrictions are unnecessary.
  •  The CARD Act restrictions, such as the prohibition on rate increases for existing balances and the limitations on penalties and over-the-limit fees, severely hamper the ability to manage customer risks. Not only does this result in higher rates than would otherwise apply without the CARD Act, but those customers who might otherwise pay lower rates are subsidizing those who should pay higher rates, and credit availability may be constrained.
  •  Under the CARD Act, when there is an increase in rates, the increase must be reviewed every six months for the life of the account. We believe there should be limitations with regard to this review process as this will reduce burdens for the industry, without sacrificing significant benefits for consumers.

To read the full Comment Letter, download the PDF.