The CARD Act was finally implemented 9 months after it was signed by President Barack Obama. Before this was signed, it was a highly debated topic in the Senate and by experts in the financial industry. This delay worked in favor of the credit card companies because during the interim period, they not only increased the APR on most of their credit cards, but also enhanced the fees and other charges associated with the card. Therefore, in order to understand the effect that this act has had on consumers, it is imperative to trace back to 2008 and draw comparisons.
The prime bank rate between the second half of 2008 and late 2011 did not change. The rates of mortgages also saw a decline. Despite this, there was an average increase of 2.1 percent on the credit cards. The customer credit outstanding that stood at $800 billion rose by another $16.8 billion as a result of this increase.
The intention of the CARD Act was to make credit cards more customer-friendly. However, this was not to be. Instead, it became tougher for customers with average credit history to obtain credit cards and the ones who already had credit cards had to accept the interest rate hike before the act came into effect. The average increase in the interest rate was in the range of 1.6 percent for those with excellent credit history, while those with poor scores had to concede to an average increase of 3.4 percent.
The balance transfer fees have also increased consistently despite the presence of the CARD Act. There is no cap on the upper limit charged for balance transfers. Instead, customers are charged a percentage of the overall transfer amount in order to process the transfer of balances from one card to the other. In contrast, before the CARD Act came into effect 31 leading credit cards had an upper limit cap for balance transfers.