Consumers have had a better time managing their credit card debt in recent years, thanks in large part to a federal law for lenders working as it was intended.
As a result of the Credit CARD Act, interest rates have mostly stayed in the same range over the last two years, and penalty fees have been reduced significantly, according to a new study from Pew Charitable Trusts. Overall, rates have largely hovered between 12.99 percent and 20.99 percent since 2009. Meanwhile, penalty fees for going over a borrowing limit have been eliminated and late fees have been cut to $25 for a first offense.
“The Credit Card Act is an excellent example of how bipartisan legislation can be enacted that both protects consumers from potentially harmful practices while simultaneously creating a marketplace where banks and credit unions are able to compete based on clear and predictable pricing,” said Eleni Constantine, director of the Financial Security Portfolio at the Pew Health Group.
Greater disclosure of interest rates and fees has likely led more consumers to get a better understanding of their finances, and successfully handle their credit card debt with greater aplomb.