According to the Center for Responsible Lending, the Credit CARD Act of 2009, which designated the Federal Reserve Board to introduce new regulations for the credit card industry, has been successful in increasing transparency for consumers. As a result of the new regulations, the actual interest rates cardholders pay is now closer to the advertised rates. The advertised rates are what you see on credit card applications and sites that include credit card reviews like Consumerism Commentary.
The actual rates that customers end up paying on their debt differ from these rates for a variety of reasons. If a borrower goes into default, the interest rate will increase. Credit card issuers can still change rates after a customer enrolls, but only on new charges. Furthermore, balance transfers and cash advances affect the actual overall interest rates customers pay.
Before the Federal Reserve decided on the new regulations, the gap between advertised and actual rates had been increasing. Also, according to the Center for Responsible Lending, the data show that actual overall credit card interest rates have not increased as a result of the Credit CARD Act (after taking into account economic conditions). The credit card industry has claimed that the new regulations have increased costs for consumers, but that does not seem to be the case. From the report’s summary:
Contrary to credit card industry claims, the new rules have not caused prices to increase or access to credit to fall. Instead, they have benefitted the public by making credit card pricing significantly more transparent. Price transparency is likely to lower costs long term by spurring competition and making it harder for issuers to manipulate or arbitrarily raise prices.
The Center for Responsible Lending looked at data from the Federal Reserve, corporate financial filings from the credit card companies, and CreditCards.com. The study also looks at the amount of direct mail sent to consumers and determined that there has not been a decrease in credit available to consumers as a result of the Credit CARD Act, again disagreeing with claims from the credit card industry.