Bankruptcy

CARD Act Compliance Costs Outweigh Fee Benefits?

By Adam Levitin

The American Banker has an interesting piece on the impact of the Credit CARD Act.  It's behind a paywall, but here's the key insight: 

Credit card issuers were expected to raise fees and cut rewards to compensate for lost revenue from new regulations. But some have done the opposite, eliminating fees they are still permitted to charge. Most banks have increased certain costs, such as purchase annual percentage rates, and added annual fees for some cardholders in response to the Credit Card Accountability, Responsibility, and Disclosure Act's new restrictions on rate increases, penalty fees and other terms. The ones that have also eliminated fees ? including Bank of America Corp. and Wells Fargo & Co. ? claim they did so as part of an effort to be more transparent. Some experts offer another explanation: it may simply be cheaper for issuers to drop these fees rather than bring them into compliance.

At the very least, this indicates that the impact of the Credit CARD Act is more complex than its critics would have it.   

Full post as published by Credit Slips on January 10, 2011 (boomark / email).