The 2009 Credit CARD Act – Does it Do More Harm than Good?

05 Jan The 2009 Credit CARD Act – Does it Do More Harm than Good?

Yesterday’s Wall Street Journal published an opinion piece by George Mason University law professor Todd Zywicki entitled Dodd-Frank and the Return of the Loan Shark. If you do not subscribe to the Wall Street Journal, you can read more about this topic from Professor Zywicki by clicking on the link.

The gist of Professor Zywicki’s argument is this: as Congress imposes new regulations on credit card issuers such as those created by the Credit CARD Act, banks have come up with new ways to recoup lost revenue, including:

  • inactivity fees
  • increased foreign rate exchange fees
  • debit card annual fees
  • cutting reward programs
  • limiting the number of transactions for your debit cards
  • reduced credit limits
  • cancellation of card access for people with poorer credit

Zywicki argues that lower income Americans, and presumably people emerging from bankruptcy with damaged credit will be hit disproportionately hard by these new bank policies. Those whose interaction with traditional banking products was limited before may now find themselves completely shut out from mainstream banking – thus the reference to “loan sharks.”

It is estimated that the CARD Act restrictions will cost credit card issuers some $390 million annually. I am afraid that Congress and the credit card industry are engaged in a giant game of “whack-a-mole” where each new limitation is quickly met by a new fee not prohibited by legislation. Since the credit card industry can move a lot faster than Congress to dream up creative new fees and credit card lobbyist money tends to blunt and delay Congressional action, it seems unlikely that legislation will result in any significant benefit for the population that needs the most help.

The editors of the Credit Slips blog take an opposing position, suggesting that payday lenders, car title lenders and other high interest money sources (presumably not real “loan sharks”) actually charge less than credit card issuers.

What do you think? Have the CARD Act of 2009 changes saved you money? caused a reduction in your access to credit? made your financial situation worse or better?

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Jonathan Ginsberg, Esq.

I represent individuals in Chapter 7 and Chapter 13 cases filed in the Northern District of Georgia, which includes Atlanta, Newnan, Gainesville and Rome. I publish several informative web sites, including and an Atlanta bankruptcy blog, Please mention Bankruptcy Law Network when you call.
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