Comments of the National Consumer Law Center, on behalf of our low income clients, on the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act). We join with the many other commenters who explain how the Credit CARD Act has been an enormous benefit to consumers and to responsible credit card issuers. We write briefly in these comments to address two issues: the implications of any impact on the cost and availability of credit, and unfair and deceptive practices that remain on the market.
The CARD Act requires the CFPB to report on whether, in addition to other issues, the Act has affected the “cost and availability of credit, particularly with respect to non-prime borrowers.” While others will debate whether the Act has had such an impact, we write to emphasize that some increase in up-front prices, and some restriction on the availability of credit, should be viewed as measures of success, not as negative unintended consequences.
Honest lending requires full and honest up front prices, not deceptively low ones that mask the back-end fees and bait-and-switch repricing that were widespread before 2009. Similarly, predatory credit card lending that was not based on ability to pay was part of what drove the 2009 reforms. Responsible lending requires turning down applicants who are unable to repay the credit. Regulation should restrict access to irresponsible and destructive forms of credit.
We also reiterate our earlier comments that additional reforms are still needed to address unfair and deceptive credit card practices, particularly regarding:
- Deferred interest credit cards used by big box retailers, healthcare providers, and billme-later plans;
- “Bad credit” and fee harvester cards;
- Debt collector credit cards that revive old stale debts;
- Lending without regard to ability to pay;
- Tricks and traps with rewards.
These practices are discussed in more detail below.