Study: New Laws Have Not Diminished Credit Availability

New regulations put in place for credit card companies last year are having a positive impact on consumers, according to a study from research group Center for Responsible Lending, and at the same time credit available has not shrunk as previously feared.

The Credit Card Accountability Responsibility and Disclosure (CARD) act passed in 2009 was designed to protect consumers by creating more transparency in credit card company practices. For example, the Act that took effect about a year ago requires that companies give consumers notice 45 days before any big rate changes or penalty fees are added. It also forbids most rate increased on cards within the first 12 month after being issues.

The CRL report took a look at how these new rules have affected the credit market one year later. The study found that many banks have created new fees during that time as a way of making up for lost revenue, but have not truly hiked up interest rates or even cut back on extending credit.

“This report’s findings refute claims by the credit-card industry that new credit-card rules have restricted access to consumer credit and raised its costs,” the report said.

Not everyone is convinced that the picture is as rosy as the CRL study touts. The American Bankers Association, for one, has maintained that the new rules would make credit more expensive and limit the number of people who could qualify for credit cards.

“We think the real story is that the number of new accounts is dramatically down and a significant number of working Americans are being edged out of the marketplace or facing higher rates and tougher credit terms,” said Kenneth Clayton, ABA’s senior vice president and general counsel for card policy, as quoted in a Wall Street Journal article. “It’s impossible to say at this time whether that’s a result of the CARD Act, the economy, or a bit of both.”

Still, the CRL says that “an estimated $12.1 billion in previously obscure yearly charges are now stated more clearly in credit-card offers” and that is certainly a win for consumers.