(WASHINGTON) -- Elizabeth Warren, assistant to the president and special advisor to the secretary of the treasury on the Consumer Financial Protection Bureau, kicked off a conference Tuesday for the anniversary of the Credit Card Accountability, Responsibility and Disclosure Act, by praising the credit card industry for going beyond the requirements of the law to ensure clarity and transparency for consumers.
“A year later, the CARD act has brought about major changes in the way the industry operates,” Warren said in the keynote address. “Much of the industry has gone further than the law requires in curbing repricing and over limit fees. A number of issuers have eliminated some of the practices that can confuse customers and cost them money they reasonably did not expect to pay. Lenders in the industry deserve credit for moving in the right direction.”
Implemented last year, the Credit CARD Act aims to protect consumers from predatory lending practices, penalties and interest rate hikes instituted by credit card companies. Under the act, credit card companies must give borrowers a 45-day notice before raising interest rates or making other significant changes, must adhere to limiting fees on credit card holders’ accounts, and make it more difficult for students to obtain credit cards, requiring a co-signor for people under the age of 21.
“When the act was signed into law in May 2009, it was clear that the credit card market was in need of serious reform,” Warren said. “The CARD Act was designed to reduce surprises in the repricing of accounts and to take a major step in improving the overall transparency of credit card costs. As a result of the CARD Act, consumers now have better information about how much they're paying for credit and how much they might save on interest if they pay down their balances more quickly.”
Warren also lauded the work of the CFPB but assured that more work needs to be done to ensure clarity for consumers to understand the costs and benefits associated with various credit cards.
“In the credit card market, we have more work to do and the task is formidable,” she said. “It is still difficult for many consumers to understand the costs and risks of each individual credit card or to compare cards directly. Our next challenges will be about further clarifying price and risks and making it easier for consumers to make direct product comparisons.”
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